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M&A: A VIEW FROM THE OTHER SIDE

SIGNAL

20 September, 2011

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TOPICS

I Debunking Some MythsII Observations:

» Strategic vs. Financial » Services vs. Software/Product

III How We Think About AcquisitionsIV A Word From our Sponsor

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FIRST, LET’S DEBUNK A FEW MYTHS

1.MYTH: There are plenty of “Strategic” deals which disregard financials

REALITY: There is no such thing as a “Strategic” deal

2.MYTH: Deals tend to be cookie-cutterREALITY: In fact, Holding Companies are getting more and

more creative

3.MYTH: Agencies and Holding Companies move slowlyREALITY: true enough, but today, they are working much

more quickly, putting IOI/LOIs on the table quickly to lock out others

4.MYTH: Agencies and Holding Companies won’t pay software multiples

REALITY: True enough, as a general rule. BUT – if we want an asset badly enough, the pricing can get very aggressive

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STRATEGIC VS. FINANCIAL ACQUISITION – MY OBSERVATIONS

1.Remember the 80/20 Rule - 80% non-financial metrics:– Culture– Leadership– Approach to Human Capital– Innovation

2.Strategic Accretion is tantamount to a deal getting done– Additive Services: drive geometric growth not possible stand-

alone– New Processes, IT, Talent, Capabilities, etc

3.There is no Tomorrow– There is no portfolio mentality – every deal must stand on its

own merits– Agencies are not financial investors looking for exits– So, done is done

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STRAIGHT FROM THE FRONT

1.“Our crew only works with the coolest clients. We pick and choose. Nike, Apple, Adidas…”

2.“We have to maintain our brand. It’s the most important thing to us.”

3.“Once we do the deal, we’d really prefer to be left alone.”

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SERVICES-BASED BUSINESS: WHAT WE BUY

1. We Buy People

2. We Buy Cash Flow (which includes Clients)

3. We Buy Geography

4. We Buy Capabilities

5. We Buy Magic

6. And Where Possible…We Buy Scale

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QUESTIONS WE ASK OURSELVES ABOUT TARGETS

1. 1. How does this satisfy Growth objectives?

2. What immediate Client needs does this satisfy?

3. Is the business:• In growth mode?• In high demand?• Difficult to replace?

4 . What’s the Competitive Differentiation?

5. What is the Integration/go-to-market model?

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And Now…A Few Words From Our Sponsor

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OUR GOAL, OUR AMBITION

Our Goal:

Drive explosive growth by ensuring that we transform brands and businesses with world-class

capabilities in the most relevant domains of marketing services

Our Ambition:

To be the best acquirer in the marketing services industry

To ensure differentiated growth for MWG, leveraging our assets in the most compelling way possible by aligning all resource allocation decisions, globally,

against opportunities of greatest value

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Smart Tactical Deals• Low risk/quick payback• Example: Books of business

Necessary Defense• Example: Extending footprint

outside of BRIC markets, low cost production hubs

Growth at Scale• Client needs for services, new

geographies. Provides revenue/margin growth

DEFINING OUR PRIORITIES

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True Innovation• New to the world, lucrative,

client-compelling services; moving up the value chain

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A FEW KEY PRINCIPLES

1. Every Target Has An Operating Home• All transactions will be sponsored by an

operating unit• Regardless of where a deal sits, it will be

available to all WG operating companies

2. Deals Do Not Replace Strategy. They Accelerate It.• All transactions will start with a specific

strategic rationale:– Relevant to WG– Relevant to clients– Domains of differentiation and growth

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REACHING ME

Marc.Landsberg@mrmworldwide.com

@marclandsberg

Marclandsberg@gmail.com

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THANK YOU