What's More Satisfying Than Selling Your Company? Buying it Back

Last Updated Jan 21, 2011 4:32 PM EST

Ten years ago, at the height of the dot com bubble, Michael Kempner sold his East Rutherford, NJ public relations company, MWW Group, to Interpublic Group (IPG) for a tidy sum. Isn't that what every entrepreneur dreams of? Sell your company when valuations are high, stick around for a couple of years to work for the new owners, then head out to start something new. Except it didn't quite work out that way for Kempner, who instead remained with his baby for ten years, growing the company and racking up industry awards and personal recognition. And then, at the very end of last year, he and 15 senior managers bought the company back. It's a highly unusual scenario, so I recently had a chat with Kempner to learn a little bit more.
DF: Why did you originally sell to IPG?

MK: At the time the PR industry was mature. We had just experienced rapid growth in the dot com boom and that gave PR a seat at the table. Valuations were in the stratosphere. I though it was the right time to be part of a larger global organization. With that larger global organization, there were many benefits that I thought would accrue. Investment, global expansion, and significant client flow, for example.

DF: Is that how it played out?

MK: None of that happened. We never became a core holding. They own 20 PR firms we were third largest. But they decided to put all their investment into two brands and to grow them with new business and investment capital. They over-invested in those companies and under-invested in companies like mine. The benefit was that they left us alone and we were able to run our business as we saw fit. I was not unhappy with that tradeoff. I never would have stayed for the decade if not for that.

DF: So what instigated the buy-back?

MK: Until 18 months ago, it wasn't anything that I considered. Two years ago, we really began to see rapid changed in the pr industry again. PR was at the forefront of the digital revolution. And we began to understand that as marketing changed from a monologue (which is owned by advertising) to a dialog (which is owned by PR), there was a need for companies to build trust with constituents because the brands that establish trust will be the winners. The industry became a place for nimble, creative, organizations, and for organizations that didn't need to focus on quarter-to-quarter earnings. I didn't love working for a public company. Their priorities and my priorities weren't the same. I'd spend a big part of my day fighting for my people so I could deliver to them the kind of company they deserved to be in, in terms of compensation, benefits, and other issues. And I had been there for a decade and they had not set up a succession plan. So we began to enter into a dialog. It was oddly a natural evolution. We came to the same conclusion at the same time.

DF: So how will things change, now that MWW is independent again?

MK: The ability to have had my senior management participate in the purchase was one of the most personally satisfying elements for me. I retain majority control but fifteen of my managers are now owners. So the types of conversations that I'm having with my fellow owners... if you sat in a room, you would feel a difference in the energy. There's a spring in people's steps. It's an intangible that you can't quantify.

Under IPG, we were cash rich but we weren't allowed to spend our own money. We were cash constrained. So now we'll invest in recruiting, developing, and retention of people. Your only asset is your people. If you hire the right people and give them the opportunity to be great, the client side is easy and the rest takes care of itself.

Do you dream of selling your company? How do you think your culture and your operations would change if you did?

Further reading:

Is Your Company Built to Sell?
Ready To Sell Your Business? Avoid These Mistakes
4 Ugly Truths About Selling Your Business They Don't Teach Your at Harvard