Y&R snaps up RLM for dollars 35m in latest IR deal

NEW YORK: In yet another display of the keen interest multinationals have in the high- margin, high-growth IR sector, communications behemoth Young & Rubicam snapped up Robinson Lerer & Montgomery last week for an estimated dollars 35 million.

NEW YORK: In yet another display of the keen interest multinationals have in the high- margin, high-growth IR sector, communications behemoth Young & Rubicam snapped up Robinson Lerer & Montgomery last week for an estimated dollars 35 million.

NEW YORK: In yet another display of the keen interest

multinationals have in the high- margin, high-growth IR sector,

communications behemoth Young & Rubicam snapped up Robinson Lerer &

Montgomery last week for an estimated dollars 35 million.



The deal adds IR firepower to a communications conglomerate which

already houses PR heavy-hitters Burson-Marsteller and Cohn & Wolfe, and

is the latest in a line of IR transactions that has seen the Lighthouse

Global Network acquire Morgen-Walke Associates (PRWeek, Jan. 31) and

BSMG snap up the Financial Relations Board (PRWeek, Jan. 18, 1999).



Only two top IR firms, Abernathy MacGregor and Kekst & Company remain

independent - and likely won’t be for long. Before closing the RLM

acquisition, Y&R had also talked with Abernathy, and Havas is said to

have an interest as well.



One source who helped negotiate the deal claims Y&R chose RLM because it

had profit margins of more than 20%. While Y&R paid around dollars 35

million, there could be additional payments if performance targets are

met over the next few years, The Wall Street Journal reported.

Additionally, RLM staffers from the mailroom up have been told to expect

a bonus as a result of the deal, expected to close within the next four

weeks.



RLM vice chairman Walter Montgomery said that the decision to sell

wasn’t an easy one. ’We have grown four-fold over the last four years,’

he explained.



’We had no interest in selling, but then we thought about it and what

our clients wanted.’



Added Y&R CEO Tom Bell, ’We don’t think of them as an IR firm. We think

of them as a strategy firm.’



Linda Godsen Robinson becomes vice chairman of Y&R and will retain her

duties as chairman and CEO of RLM. The firm will retain its name despite

the departure of partner Ken Lerer, who left to become an SVP at America

Online. ’It has been a very good brand name and we want to keep it,’

Montgomery said.



RLM was established in 1986 and was immediately acquired by ad agency

Bozell, Jacobs, Kenyon & Eckhardt. However, the RLM partners bought the

firm back four years ago. Lerer and Robinson were the agency’s major

stakeholders.





RECENT IR MEGADEALS



Deal: Young & Rubicam buys RLM in March, 2000



Skinny: Deal worth dollars 35 million; RLM’s profit margins seen as

key



Deal: Lighthouse buys Morgen-Walke in January, 2000 Skinny:

Chicago-based holding company makes first foray into IR Deal: BSMG buys

FRB in January, 1999



Skinny: dollars 33m deal creates world’s largest IR shop.



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