Kitkatt and Nohr in earn-out court battle with Publicis

Suspect we’ll be spending some time in the courts with m’learned friends this year and 2017 has started with a cracker, Paul Kitkatt and Marc Nohr (below) suing Publicis Groupe for £8.5m, £4.9m in unpaid earn-out they claim they’re owed and £3.6m in damages for breach of contract. Publicis is contesting the claims.

Caveat emptor is well-known, caveat venditor less so but it’s probably what this case will turn on.

Kitkatt and Nohr says they were unaware that Procter & Gamble accounted for over 50 per cent of Digitas’ revenue when they were bought to merge with the big Publicis digital agency in 2011. They were even more surprised to find that the business was rocky despite assurances by Publicis (which may or may not be held as legal) to the contrary. Clearly the loss of such a large account would affect the overall business.

Should they have done done their homework more thoroughly – caveat venditor? Did Publicis deceive them? Publicis says it didn’t. There’s a possibility the court might like to hear Maurice Levy’s take on this.

Keith Hunt of Results International wrote a piece the other day, clearly inspired by this, which suggested “trust” was still the most important consideration in selling a company. Kitkatt and Nohr might demur.

The most astonishing thing about this – so far – is that Publicis paid $1.3bn in 2007 for a business mostly dependent on one big advertiser. Suppose they had four good years out of it but even so. Publicis shelled out another €416m for LBi in 2013, now rolled into Digitas as DigitasLBi.

And Publicis’ digital buys keep on taking away. It’s just announced a €1.4bn write-down in its 2016 accounts caused by overpaying for under-performing digital agencies, with another big buy Razorfish (bought from Microsoft for $530m in 2007) taking the rap.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.