British public relations group, Brunswick, has agreed to sell a minority stake to a US fund managed by Byron Trott banker Warren Buffett in a deal valuing it at around £500m and getting a £70m payout to its chairman Sir Alan Parker.
BDT Capital Partners, a Chicago-based investment and A commercial banking group run by TrottYou will get a 10.7 percent stake in the company through preferred stock which will be paid as a coupon.
Brunswick told staff on Wednesday that it would abandon the UK’s limited liability partnership structure and incorporate it as a private company as part of a plan to increase investment and capitalize on demand for political lobbying and communications consulting.
The investment, which is due to be completed by August, will allow a £140m payout to Brunswick’s 200 partners. Parker, who co-founded the company in 1987 with Louise Charlton and Andrew Fenwick, will receive £70m, or half the amount Total.
The restructuring is the latest in a series of mergers and offshore investments in PR firms as they compete to win business from large international firms and try to create institutional structures that will make them outlast their founders.
Private Equity Group CVC Capital Partners I paid more than 350 million dollars For a majority stake in the Brunswick Teneo competition in 2019.
Finsbury, Glover Park Group and Hering Schuppener merged last year as the UK, US and Germany-based companies moved to face international corporate communications competitors such as Brunswick and Teneo.
The newly formed Finsbury Glover Hering management has bought a 49.99 per cent stake in British advertising group WPP, which owns all three companies.
financial public relations company Sard Verbinnen sold a 40 percent stake حصة to private equity firm Golden Gate Capital in 2016, valuing the business at $150 million.
Brunswick, which operates in 27 cities globally and advises more than a fifth of the FTSE 100 index, has begun evaluating its options for pre-pandemic capital restructuring in a project codenamed “Dynamo,” a person involved in the process said.
The deal would value Brunswick at £500m and the group was expected to generate £300m in revenue this year, the people involved said. One person added that BDT spending of his 10.7 per cent stake would be more than the £50m implied by this valuation because he would receive a coupon on his preferred stock.
BDT, which previously worked alongside Brunswick for clients like Mars, invests in family-owned and founder-led businesses. They generally hold their investments for longer than private equity houses and rely less on debt financing for leverage.
Brunswick will be invested through the $9.1 billion BDT fund raised last year and people involved in the deal have said he will remain a shareholder for at least 10 years. BDT will take a seat on the new Brunswick Board of Directors.
“Our minority, long-term investment will continue to support [Brunswick’s] Efforts to remain an independent and partner-controlled company, said Trout, a former dealmaker at Goldman Sachs who advises billionaires such as Buffett and Waltons of Walmart. BDT declined to comment on the size or structure of its investment.
One of the people involved said the £140m distribution would have been partly funded from existing reserves and the group would also increase its bank borrowing.
In a letter to Brunswick’s 1,300 employees outlining the plans and seen by the Financial Times, Parker said non-partners would receive a one-time payment of a total of £18m, equivalent to about 12.5 per cent of their annual salaries.
He added that Parker, Charlton and Fenwick will sell 4 percent of the shares in the company to free up shares for restructuring. One of the people involved said the deal would leave Parker with a 48.3 percent stake, about 2 percent less than his current holding, with the remainder owned by the partners, his co-founders and BDT, one of the people involved said.
The letter added that an additional 15 percent of the existing capital will be issued over time to new and emerging partners under the “Growth Share Scheme”.
Parker, known for his political connections to the likes of former British Prime Minister David Cameron, handed over 40 percent ownership of the company to its partners in an earlier restructuring in 2012.
He insisted he would stay at Brunswick after his surprise £70m win, telling staff he was “as active as ever”.
Additional reporting by Arash Masoudi