The hiring of Merrill Lynch indicates that a bid for Grey Global could be forthcoming as early as next week.
Merrill Lynch will examine Grey Group's assets, which include advertising agency Grey Worldwide, media planning and buying shop MediaCom, and PR firm GCI Group.
Sources have said that once due diligence has started, executives at WPP will know quickly if it is worth launching a bid, although it could be much longer before a deal is struck.
If WPP does make a bid, it will be the third major group it has swallowed up in recent years, following its acquisition of CIA-owning Tempus and Young & Rubicam before that.
WPP moving its interest forward follows Publicis chief executive Maurice Levy ruling out a bid by the French firm.
In an interview in French newspaper Le Figaro, Levy said it was not necessarily in the interest of Publicis to make an offer on the whole of Grey Group and denied that it had anything to do with cash, saying the decision was purely a strategic one.
Speculation is that, if WPP does not bid for Grey, the firm could be broken up and sold off piecemeal, with Publicis, among others, acquiring parts of the business.
Initial speculation was that WPP might have problems bidding for Grey because one of its major clients is Unilever, a rival to Grey's main client, consumer products giant Procter & Gamble.
However, with P&G making clear to Grey and Publicis that it is opposed to having a single ad agency relationship, thereby ruling out a Grey/Publicis tie-up, and at the same time indicating it had no problem with WPP's client relationships, the way was left open for the British-based firm to declare its interest.
There will, of course, be no deal with WPP unless 77-year-old chairman, Ed Meyer, wants to do business with Sir Martin. Meyer owns 16% of Grey, but more importantly 59% of Grey's Class B voting shares, which gives him the final say.
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