It used to be received wisdom that an ad agency’s assets (or any other agency’s assets) went ‘up and own in the lift’ and that therefore agencies or agency groups were bad investments because the staff and their clients could walk at any time.
And at WPP, which Sir Martin now runs of course, it doesn’t seem to. WPP has just secured an apology in the London High Court from three people connected with its Everystone marketing consultancy who thought they could leave with some of the business.
Here’s the report from Bob Willott’s Marketing Services Financial Intelligence.
Two contractors and a former employee of WPP’s strategic marketing consultancy Everystone have been obliged to make a humiliating apology in the High Court following legal action said to have been taken to protect the companies’ business interests.
The apology forms only part of the settlement terms, details of which have not been disclosed.
Patrick Sutton, Laurence Shorter and David Blyth set up a new business called The Great Game in July 2010. Sutton and Shorter were appointed directors of the company with equal shareholdings. At the time Blyth was a senior employee of Everystone while Sutton and Shorter had been involved as contractors. Blyth had been managing director of WPP’s subsidiary Brand Union in South Africa until moving to London as a principal consultant with Everystone in 2008.
All three defendants acknowledged in the High Court apology that they “overstepped the mark in setting up The Great Game and dealing with clients” whilst a contractor or employee of Everystone and that their actions amounted to a breach of their contractual obligations. They also admitted to misusing WPP’s property and proprietary information.
WPP and Everystone are continuing to pursue legal action against other parties.
This has happened before, to hotshot London creative agency Adam & Eve when the founders left RKCR/Y&R. They also had to shell out the best part of £1m although the agency has since prospered.
The court actions are also a shot across the bows of people who think they can sell their businesses to WPP, complete their earn-out period and then go and do the same thing again.
But you also have to ask whether WPP, the biggest marcoms company in the world, actually needs small outfits like Everystone. Are they really worth the hassle?