NEW YORK: Inventiv Health, a conglomerate of firms that serve the healthcare industry, has acquired Chandler Chicco Agency (CCA) for $65 million.
The deal will provide CCA with far greater resources to continue its global expansion and acquisition plans. It will also give Inventiv further entrée into the world of healthcare PR, a field the company feels is becoming ever more critical in the current communications environment.
Robert Chandler, co-founder of CCA with Gianfranco Chicco, said that his firm sees the deal as a chance to pursue a long-held desire to increase its global presence, without sacrificing its management style and culture.
"It was more about our global reach than anything," he said. "We've had targets of acquisition we've been thinking about for a long time...They've wanted us to either partially acquire or acquire them, and it's a very difficult thing to do when you've got fairly narrow pockets as an agency."
Chandler and Chicco will remain on as agency principals and continue to run the company. Chandler said that they have an "ironclad contract" that will allow them to continue to control the agency, and that no staff cuts will result from the acquisition.
"[Inventiv doesn't] fiddle, which obviously we were very happy about," he said. "They're buying the culture and the brand."
Current CCA clients were pleased with the deal, according to Chandler. He said that the Europe's biggest markets are the "primary focus" for CCA's expansion, and that the agency will be looking to "aggressively acquire" new firms there and in Asia.
He also cited potential stock option plans for CCA employees as an advantage of joining a public company.
The acquisition marks Inventiv's second recent major purchase of a PR firm. In February, the company bought New York-based Chamberlain Healthcare Public Relations for $13 million.
"If you look at the pharmaceuticals and life science sector, public relations is becoming an increasingly important area to build brand awareness and disease awareness," said Blane Walter, president of Inventiv Health. "In today's highly regulated environment and with skeptical audiences, PR provides an efficient, credible, and reliable way to build a brand."
He said that Inventiv will now focus on building Chamberlain and CCA for its PR platform, rather than pursuing further acquisitions.
"Our strategy when looking at companies is finding great cultures and great leaders and supporting them, as opposed to trying to adapt them," said Walter.
He added that Inventiv and CCA share some current clients, but that he believes both sides will be able to profit from sharing their client lists.
"We have a lot of clients, frankly, where one party is strong and the other is not," he said. "We've got some pretty strong brands in our communications group, and where it makes sense for the client we're going to make those introductions."
All of CCA's subsidiary brands, including Biosector2, BrandTectonics, CCA Advertising, Determinus, Litmus, and ‘nition will remain unchanged as well. The transaction, which includes a three-year earnout period, is slated to close in the third quarter of 2007.
Inventiv was not previously heavily invested in the PR industry, but it is not the first company to decide that a major PR firm would be a complement to its existing business; FD was acquired by the consulting firm FTI this past September in a similar move.
Phil Palazzo, an MD at AdMedia Partners who advised CCA on the deal, said that the PR industry's high growth rate is fuelling interest in it from acquirers outside of the traditional holding companies.
"[In] marketing in general, there's been an awful lot of interest from strategic and financial buyers," he said. "And that's certainly been the case with PR."
Palazzo pointed out that in both the FD transaction and in CCA's, the buyer was able to create a PR platform that they felt rounded out and complemented their other service offerings.
"[Inventiv] is a company that focuses only on top pharma and biotech clients, so they really understand what they do," he said. "The service offering, potentially, to clients is going to be much stronger as a result."