Ashish Bhasin, Brian Tellis recount specifics of Dentsu’s acquisition of Fountainhead
Dentsu’s acquisition of Fountainhead last year has been a milestone development within the events industry. Accredited for rapidly taking the company from 45 people to 3500 people, Dentsu’s sharp and focussed Chairman Ashish Bhasin recently took to the stage at EEMA Leadership Retreat in Antalya for an unrestrained dialogue with Fountainhead’s Brian Tellis, moderated by Ashish Pherwani of Ernst and Young.
Talking about the key features that he looks for before considering an acquisition, Ashish Bhasin said, “I’m a strong believer in cooperation. Even if I had worked 20 years I would not have build a company as strong as Fountainhead. So the first thing I look out for is domain specialization and a consistent track record of growth. Contrary to what people believe, even though money is an important part in an acquisition, it is a very small part. What is more important is the chemistry between the two entities. We assess if our values and synergies match and that by itself clearly outweighs the financial factor.” Chiming in Brian Tellis added, “We all want to create a legacy, build brand equity and scale up. There was never any insecurity about my company, we are amongst the best in our business when it comes to systems and processes, but the line is now blurring between ATL and BTL and collaboration seemed to be the best way to scale up. What excited us most about Dentsu was its culture and image. I will be honest, we did attach a certain amount of importance to financials but that was sorted out quickly within the first two meetings.”
While ‘money’ may not be the chief influencer for Bhasin, the value of the deal does play a very critical role for the company being acquired. But what defines it? Bhasin explains, “The way we work at Dentsu is that we agree upon a multiple with whichever company we are acquiring and that defines its growth. If the agreed multiple is 10 then if the company makes 100 cr in a year then we will pay them 10 times 100 which is 1000 cr. We never acquire a company for the topline or bottom-line. I’m measured on how much I can grow my company therefore the thought that “the acquired company should not make too much money else we will have to pay them more” does not exist. “
Speaking about the time taken for the entire end-to-end process Bhasin says, “I rely more on my instinct and gut because I feel that is quicker and more effective than hiring an evaluation company. Negotiation was very quick because I feel if you’re buying a prized asset than why should you underpay. And if you have mature people on both sides then this step goes very quickly. Once the financials were agreed upon, the entire process took about six months.”
Once the contract is signed, the next step is the integration of the new company. “Integration is very critical. This process is initiated even before the deal is fully done”, says Bhasin. “I like to give as much freedom as possible to the company I’m buying because they know how to run their company best. Having said that, financial reporting and following company norms and processes is needed. HR, finance and IT integration is done almost immediately. Also we generally agree upon the deliverables for the next five years before the acquisition is formalized and therefore there is seldom a need for me to step into the acquired business”. Adding to this Tellis comments, “While financial reporting and following norms and regulations may seem uncomfortable at first, if you look at it closely its actually good for your own business. The trick is to keep your ego aside and consider that by keeping a strict standard you are only improving.”
Having acquired 14 companies in the last few years, Dentsu is clearly a strong advocate of consolidated growth. Speaking more on this subject in context to the event agency Bhasin says, “It is encouraging to see that EEMA has a vision for year 2020. However, by then half of the event planners sitting in the room will not be there, agendas change, opportunities change, and also half the jobs that exist today may cease to exist due to new talent, tech integration and automation. When this happens there will be winners and losers, and your fate will be determined by consolidation, cooperation and strategic collaborations.”
Speaking about the one big challenge faced by the experiential industry Bhasin says, “All of us know that events have a tremendous impact. But marketers understand numbers in excel sheets because they are easy to qualify. The key is for the industry to find a common metric to address the issue of measurability that most clients have.” Concluding the discussion he boldly remarked, “The events industry has a huge scope but its potential is not being optimally utilized. There is room for it to grow by at least two or three times but it seems the industry as a whole is unambitious. If done right, the experiential industry should be a 100,000 crore business.”
