hat acquisitive groups should do more to encourage the preservation of the cultural characteristics and a continuing sense of co-ownership by employees of the agencies they acquire, it was encouraging to read .
The development is significant because next year Cheil has the right to acquire more shares in BMB and as a result would become the majority owner, although BMB has not acknowledged that this may have been a factor in its thinking.
At present, BMB is still in the driving seat as much as BBH and CHI are with their 49% minority investors Publicis and WPP.
But unlike the BBH and CHI deals, BMB has no choice but to surrender control as soon as Cheil chooses to exercise its option.
So it makes good sense to create a co-ownership framework now that will extend beyond the date when Cheil takes control.
Sadly, it proved too complicated to make everyone a member of the limited partnership as such, but apparently the profit sharing scheme retains most of the characteristics that would have applied to membership of such an entity.
As previously observed, the most commonly cited reason why acquisitive companies are loathe to contemplate such arrangements is that they dilute the income stream that would otherwise accrue to their shareholders.
Cheil is taking that risk, but in doing so is acknowledging that it may be better to work with well motivated agency personnel and thereby expand the size of the financial cake in which it shares, rather than destroy motivation by simply grabbing a bigger slice of whatever profit the agency earns.
In essence Cheil is providing tangible evidence in support of what was asserted here nearly a year ago, namely that:
- It is perfectly possible for senior personnel to continue to be partners with, rather than just employees of, a remote conglomerate owner.
- Thereby it is perfectly possible to preserve the cultural cohesion that every people business needs.
All it needs is the will, and a less greedy short-term attitude by acquirers.
Having said that, only time will tell whether the BMB arrangement will deliver the benefits that all the parties doubtless seek.