KANSAS CITY, MO: NKH&W, an integrated marketing firm, has started an employee-ownership plan and changed its name to Nicholson Kovac.
Jim Bergeson, president of the Minneapolis office, said of the Employee Stock Ownership Plan (ESOP), "The goal is to pass [the firm] on to the employees so it can [stay] independent. We believe independent agencies can provide better and less-complicated service than conglomerates, where you run into all sorts of conflicts of interest."
Bergeson was involved in switching to the new structure because he used to be CEO of Minneapolis-based Colle & McVoy, which was an ESOP before it was bought by Toronto-based MDC Partners.
Bergeson said the name change simply reflects the fact that previous owners Steve Huntley and Paul Welch left the 23-year-old agency many years ago.
The firm leaders are president and CEO Pete Kovac and EVP and chief creative officer Nick Nicholson.
"We thought it a fitting time to leave a legacy to the primary owners," Bergeson said of the name change.
Nicholson Kovac has 141 employees, with nine professionals in PR.
The agency has used a fairly unusual arrangement for setting up the ESOP. It is "seller-funded," meaning that the current owners set aside profits to transfer ownership to the employees (rather than the employees borrowing money to buy the company).
Bergeson said there are many advantages to being employee-owned, such as staff and client attraction and retention. He estimated that, as with many ESOPs, eventually half the firm would be employee-owned.
In addition to Kansas City and Minneapolis, Nicholson Kovac has offices in Tulsa, OK, and Little Rock, AR.