Media, communications and market research group Aegis has somehow managed to shrug off the global recession in the advertising market. During the past financial year, Aegis Group, the listed holding company of Carat, one of the largest media services companies in the world, and Synovate (previously known as Aegis Research), a global research business, saw revenues rise by a very respectable 11.9 per cent to £591.9m.
Richard Given, Synovate’s head of legal affairs and one of a team of three lawyers in the group, admits that times have been tough for Aegis. It has had to take cost-cutting measures. But he argues that overall Aegis has coped very well with the economic downturn and has come out of it stronger. “We’re now well placed for a pickup in the economy and everyone’s excited about where we’re going from here,” he insists.
In 2002, Aegis won substantial new business and continued to make several acquisitions, enabling it to meet its strategic objectives of entering new geographic markets. Last year it completed around 20 acquisitions, ranging from several hundred thousand to tens of millions of pounds.
In August 2002, the group acquired Sample Surveys, one of the largest independently-owned custom market research agencies in the UK, for an initial cash payment of £5.4m and a deferred cash payment of £1.8m. The acquisition of Sample Surveys further strengthened Synovate’s European network. Currently, Given is working on acquisitions in around half a dozen countries, while another half a dozen or so acquisitions are just bubbling under.
In light of these acquisitions, it is unsurprising that Given dedicates around 80 per cent of his time on acquisition-related work, including drafting relevant documents and calculating earn-out payments. Given says that Synovate tends to buy from the management who have built up the businesses and grown them into the companies they have become. “Consequently, we have to buy the companies using a structure that will incentivise the management going forward,” he says.
Given says that in order to manage so many acquisitions effectively he relies very heavily on good lawyers. Aegis, however, does not have a legal panel. “Our ethos is not to use law firms. We tend to develop relationships with individuals who we have confidence in and whose work has proved to suit our needs. I sometimes forget which firm a particular lawyer works for,” says Given.
For instance, Given has a relationship with Jeff Twentyman, a corporate partner at Slaughter and May. The firm typically advises on large-scale transactions at plc level. In April 2002, Twentyman advised Aegis on the terms of its senior unsecured convertible bond issue, raising E150m (£103.8m). The net proceeds of the issue were used for a combination of the payment of earn-out obligations of approximately £30m and to refinance maturing bank debt.
When it is uneconomic to instruct Slaughters, the group uses Alastair Da Costa, a partner based in DLA’s Leeds office. Da Costa advised Synovate on the acquisitions of Sample Surveys and ViewsCast, a company that owns technology enabling businesses to monitor how effective their call centres are. Given says that the Sample Surveys transaction was very interesting to work on because the structure had to cater for a retiring majority shareholder and the management team, which held a minority stake in the target company.
Outside the UK, Aegis has relationships with individual lawyers in a number of international and local firms. In the US, for example, the group farms out work to Dean Swagert, a corporate partner at New York firm Moses & Singer. Meanwhile, in the Asia Pacific region, Given instructs Hong Kong-based Jones Day Gouldens partner Michael Chan.
On the whole, Given says he is a little wary of multinational firms because often they do not have a local law capability even in a jurisdiction where they have an office. “We want local law capability, particularly in an industry where there are often local law restrictions on the ability of foreigners to do business. We have to be very aware, sympathetic and compliant with local law,” he says.
In France and Germany he instructs Alexander Brabant of Sokolow Dunaud Mercadier & Carreras and Mathias Schwarz of Schwarz Kelwing Wicke .
Cost, of course, is also an important consideration. “We’re doing small work in some of these countries where margins are very tight, particularly when you convert to US dollars, euros or pounds,” says Given. “So to have a lawyer come along and say, ‘I’m charging you $400-$500 an hour’, especially when they’ll have to talk to someone local as well, you think, ‘Actually, I’ll talk to the local person myself’.”
Given is not sure exactly how much work is outsourced to external lawyers, but jokes: “I outsource all the work I can’t do.” By that he means that almost all acquisition-related work is farmed out because of the jurisdictional issues it raises, while the rest is managed in-house, with the exception of the US.
Working alongside Given is Simon Zinger, the head of legal affairs at Aegis Media. Given and Zinger report to Eléonore Sauerwein, the group legal director based in Paris. US-qualified Singer joined Aegis at the start of the year after the group identified a need for an additional lawyer with an industry specialism. Given says that the company has no current plans to expand its legal function, although he adds that in the future Aegis may hire a lawyer in the US, as it outsources most of its US-related work.
Before joining Aegis three years ago, Given worked as an assistant at Freshfields Bruckhaus Deringer. While at the magic circle firm he specialised in PFI projects and spent the majority of his time advising London Transport (now Transport for London) and London Underground. He says he wanted to move in-house because he wanted to be closer to the business people and the decision-makers. He says he enjoys the involvement and the sense of ownership that an in-house position brings. “In private practice you’re to a greater or lesser degree a hired gun,” he says. “You’re brought in to do a job and at the end of the job you walk away, so you have no involvement going forward.”
During the next 12 months Given expects to be involved in more acquisition-related work. Additionally, he will spend time revisiting group policies and procedures and redrafting standard terms for client contracts and letters of intent. With luck, it’ll all help Aegis to keep on shrugging.
Head of legal affairs, Synovate
|Sector||Media, communications and market research|
|Revenue||£591.9m for year ending 31 December 2002|
|Head of legal affairs, Synovate||Richard Given|
|Reporting to||Group legal director Eléonore Sauerwein|
|Main law firms||DLA, Jones Day Gouldens, Moses & Singer, Schwarz Kelwing Wicke, Slaughter and May, Sokolow Dunaud Mercadier & Carreras|