Capital MSL & CNC merger: A framework for a happy marriage?

Publicis merged financial agencies Capital MSL and CNC together earlier this year to create a new entity within the group. As the prospect of agency mergers increases, John Harrington gleans the lessons learned from the merger by CNC's managing partners.

"It’s like two people getting married who were destined to be together but didn’t realise it for ten years." Richard Campbell laughs at his analogy for the coming together of Capital MSL, the London-based agency he co-founded in 2001, and its Publicis stablemate CNC in January this year.

The ‘marriage’ has seen the 40-strong Capital MSL team unite with the 90 employees of CNC, creating a corporate-focused agency under MSLGroup across 10 offices globally. (Confusingly, the new operation is also called CNC, or Communications & Networking Consulting; for this article, we’ll call the pre-merger agency ‘old CNC’.)

PRWeek met Campbell and Roland Klein, form-erly his counterpart at old CNC and now fellow managing partner at the new venture, at their central London office to discuss integration. Their story is of particular interest as the prospect of agency mergers grows amid the recent enthusiasm for sector M&A.

Similar backgrounds

So what can we learn from the CNC merger experience? Firstly, it helps if both parties, while not carbon copies of each other, have similar experiences and complementary outlooks and skill sets.

Like Campbell, Klein also co-founded his agency 14 years ago. "The two companies have been on very similar trajectories," says the former. "They were both set up in the same year; they both had a decade of great growth, both were acquired by Publicis, and both are doing the same sort of work."

And they were "very complementary from a geographical perspective", Campbell adds. "We have a presence in London and the Middle East. [Old] CNC has a small presence in London, as well as Paris, Munich, Frankfurt, Berlin, Tokyo and Delhi."

Their particular specialisms also made a link-up attractive. Old CNC has had a greater focus on heavy industrial sectors such as chemicals, while the financial services industry has been more significant for London-headquartered Capital MSL.

And it helps to have direct experience of operating together. Old CNC has worked with Capital MSL in a less formal way since it was acquired by Publicis in 2012. Did the experience make Klein more comfortable with the formal merger? "Oh very much so, yes," he says.

Personalities matter too, and it is clear Campbell and Klein are cut from similar corporate PR cloth. Both entered comms in the first half of the 1990s. Klein, an ex-journalist from Germany, was previously head of PR and investor relations at Ericsson in Sweden, and later London. Campbell has worked for Weber Shandwick and Citigate Dewe Rogerson.

"The best thing about this deal is that we actually get on very well," says Campbell. "I don’t think we would have ever done it if we didn’t enjoy working together."

In the end it was a "pretty quick decision" to merge, he says. Talks began in the middle of 2014 and it was a whirlwind romance, taking in trips to London and Munich. Then came the process of int-egration, starting with basic questions like where to house the new agency. "If you want to integrate you have to move into one building," Klein stresses.

The newly merged CNC’s global HQ is in Munich, but the UK employees of old CNC have joined the former Capital MSL team at MSLGroup’s London HQ. It created some practical challenges, as much of old CNC’s infrastructure was supported from Germany. Campbell says: "There are process issues that come with a merger, and in those cases we just looked at who had the best system pragmatically."

He says the comms and cultural aspects of integration have been "pretty straightforward". "We’re lucky in the sense that we have a team of people dedicated to helping companies manage their talent, and that includes post-merger integration, etc.

"PR firms aren’t necessarily the best at taking their own medicine, but we were clear: this was a merger about growth, it wasn’t about cost-cutting." No redundancies were made as part of the deal.

Commercial benefits 

The integration has "exceeded expectations" in terms of winning new clients, Campbell says. CNC has secured five new briefs with FTSE100 clients.

One appointment that shows the benefits of the combined operation is the €40bn (£28bn) merger of cement companies Holcim and Lafarge. "This was managed out of London but required skills across European markets. As well as representing Holcim, we have just been appointed to be the retained adviser to the combined entity," says Campbell.

"Similarly, when Celesio, a German headquartered company with a parent in the US, had an issue in Brazil, we were able to support it across the world in a way that we may not have been able to do so before." Overall, around half of the accounts are handled by mixed Capital MSL and old CNC teams. And CNC is now handling a wider range of briefs.

Campbell adds: "The fact we’re able to build these teams so we can help solve whatever challenges our clients have has, in many respects, been the most exciting thing about what we’re doing."

Meanwhile, the fact CNC has one P&L account is "incredibly liberating", says Campbell. He highlights the benefits in terms of flexibility. "If we send people to Dubai or Frankfurt, we’re not saying, ‘how much is that going to cost?’. We can just put the team together and have them working on the mandate tomorrow without concerns internally about how the money goes around. It means you can get on in doing your best job for your client."

Looking ahead, Campbell describes CNC as "a job half done". There are plans to "invest much more" in the London business, including some major appointments set to be announced soon, while global expansion is also on the cards; Klein mentions China and Hong Kong as targets for new offices.

These all present significant challenges for the newlyweds, and while the honeymoon will soon be over, both parties are confident that this is a marriage that will last the distance. 

How Publicis is structured

The CNC merger comes amid big changes at the wider MSLGroup, which last month saw Guillaume Herbette, global vice-chairman of operations at Fleishman-Hillard, take the dual role of MSLGroup CEO and EVP of Publicis Worldwide.

Chain of command 

Herbette succeeds Olivier Fleurot as MSLGroup CEO. Fleurot steps up to a SVP role at parent Publicis Groupe. Herbette reports to Publicis Worldwide president Arthur Sadoun, who takes on supervision of MSLGroup. CNC’s Campbell and Klein both report to MSLGroup EMEA president Anders Kempe, who answers to Herbette.

The PR set-up of Publicis is complicated. The bulk of the PR operations sit within MSLGroup, excluding a small number of separate agencies including Leo Burnett. MSLGroup is a network that in the UK includes CNC, Salterbaxter and (rather confusingly) the agency called MSLGroup.

Sadoun told PRWeek of the need to make MSL "more integrated with other brands of the group". CNC is one of several MSL agencies that have adopted MSL branding (it is branded as ‘CNC part of MSLGroup’).

Leading the change 

Sadoun said: "My goal for MSL is simple. We have a great brand, and I have been meeting great teams with strong client relationships. The PR business is evolving very fast, so the question is who will lead the change in this category? We have the right technology, the right strategy, the right team and the right leader, so we will continue to build this out in the coming months."

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