LONDON: After months of rumor and speculation, Cunningham Communication has finally found a dance partner. UK-based Incepta Group snapped up the hi-tech PR plum last week in a deal worth up to dollars 75 million.
LONDON: After months of rumor and speculation, Cunningham
Communication has finally found a dance partner. UK-based Incepta Group
snapped up the hi-tech PR plum last week in a deal worth up to dollars
While the winning suitor left some scratching their heads - ’I don’t
even know who Incepta is,’ said one Silicon Valley PR veteran - the deal
is a boon for both parties.
With Citigate Dewe Rogerson and newly acquired Sard Verbinnen, Incepta
has a solid IR operation but lacked a serious PR presence in the US.
Cunningham’s revenues of dollars 23.4 million, 200 employees and clients
like Cisco and Sprint made it arguably the hottest property on the
For Cunningham, the deal is equally appealing: it gets access to
Incepta’s global network of 48 offices and capital for future
acquisitions. Most important, founder Andy Cunningham gets to define and
develop a new worldwide brand, Citigate Cunningham, as she sees fit.
’I wanted someone who wanted me to build a global brand,’ Cunningham
said. ’That’s why we didn’t sell to H&K or anyone else like that.’
Cunningham and president/COO Joe Hamilton will serve on the Citigate
The deal calls for Incepta to pay dollars 45 million now (half in cash
and half in stock) and up to an additional dollars 30 million if
Cunningham meets profit targets over the next three years.
’That’s going to be the biggest challenge,’ said Weber PR Worldwide CEO
Larry Weber, adding that Cunningham’s newly opened offices in Chicago,
Denver and London could act as a drain on profits.
Both Incepta CEO David Wright and Andy Cunningham expressed confidence
that the firm will generate dollars 4 million in profits this year.
Investors also cheered the deal, as Incepta’s stock has risen steadily
on the London Exchange since the announcement.
Although Cunningham was wined and dined by everyone under the sun, she
only took two other suitors seriously: Chicago-based private equity firm
Frontenac and Paris-based Havas. Frontenac was ready to buy 40% of the
firm, but Cunningham balked because the valuation was ’nowhere near’
other offers and Frontenac wanted control of the board. She soured on
Havas because ’we never met any (executives) from France,’ Cunningham
Some sources said cultural differences may prove vexing, but the two
groups have already worked together, co-pitching for the Motorola
The deal does not include Cunningham’s InMomentum group, a six-person
’cultural alignment’ shop that was spun off earlier this year.
Under Cunningham’s stock-option program, the firm’s 45 shareholders
became fully vested when the deal was closed and are under no obligation
’Don’t think we haven’t thought about that,’ Cunningham said, adding
that she hasn’t yet figured out how to spread the wealth.
Cunningham said she is mulling six possible acquisition targets, and
hopes to close on at least one by the end of the year. But without the
capital of an Omnicom or an Interpublic behind it, Cunningham may find
its expansion menu limited.
Incepta’s purchase of Cunningham comes amid a frenzy of M&A activity by
European-based firms. ’I wouldn’t say we’re done yet,’ Wright said.
’In two years we expect to be earning more out of the (US) than anywhere
New York-based AdMedia Partners brokered the deal.