Memo Pad: No More Ink... Early Start... Let's Make a Deal

What does Mary J. Blige have against her tattoos these days? It's hard to say, but it seems the Grammy-winning singer requested that Hearst monthly Redbook airbrush them out of her cover shot on the May issue.

LET'S MAKE A DEAL: The news that marketing and communications firm HL Group sold a majority stake to MDC Partners caught fellow public relations firms and fashion observers off guard, even if they didn't see it in The New York Times on Monday. MDC is buying a majority holding in HL with minority operational control for an undisclosed amount, although sources said it wasn't likely to be for a massive sum, as the going rate generally is nine to 11 times earnings before interest, taxes, depreciation and amortization. Hamilton South, one of HL Group's co-founders with Lynn Tesoro, declined to talk about the numbers behind the deal, but traditionally, these transactions aren't valued as much as other industries, according to one source, because there is no tangible product involved. South said HL had been approached by several firms, but liked MDC's model better than the rest of the field. 'This gives us the ability to grow and offer more to clients," he said.

Paul Wilmot, managing partner of Paul Wilmot Communications, said a low multiple of earnings is likely for a majority stake in a communications company and nine times EBITDA (or less) for a buyout. 'There are no fixed assets," he explained. 'It's all goodwill and betting that the company can retain and grow its client base." Wilmot added that MDC's strategy of maintaining a majority stake in a company while allowing it to largely maintain operational control isn't common in the p.r. and marketing business, but it's a good motivational tool for 'the original people to come up with fresh, new ideas and maybe share in the growth of the company."

Alison Brod, president of Alison Brod Public Relations, said she is 'very familiar with MDC and the executives there." And, like many in p.r., she is often approached by ad agencies. That trend may grow, she added, because as ad pages continue to decline, ad agencies are looking in other directions. Brod said that, while the concept of accepting outsider money for new office space, additional technology or more senior staff can be attractive, the downside is that money can be spread over several years and the possibility that 'you are giving up a lot of control if the company is growing." Having said that, she has not ruled out the possibility. — Amy Wicks
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