DAN Interviews

How Dentsu retains founders of companies it acquires

31 Jul 2017

A common feature of most mergers and acquisitions is that the original owners are paid for the sale of their company, following which they continue to stay with the company through a certain transition period.

At media major Dentsu Aegis Network, earnout has been honed into an art — the founders of all the 13 companies acquired by Dentsu continue to stay on with the firm post the buyout.

Flying in the face of entrepreneurial reality, where promoters either walk out in a huff or are practically thrown out once the deal is through, Dentsu Aegis has been able to buffet itself against such exits.

“No entrepreneur would want someone else telling him how to run the business he has created and grown after an acquisition,” Ashish Bhasin, Chairman and CEO of Dentsu Aegis Network South Asia, told BusinessLine.

Lucky with 13

“We have been lucky with our last 13 acquisitions — 12 buyouts in India and one in Sri Lanka — wherein entrepreneurs continue to work for the company,” he added.

For the company’s founder, the change in transition from being employer to employee might not sit well.

Bhasin insists Dentsu’s intent is to harness the innovation and leadership qualities that have been with the organisation prior to acquisition.

He adds that it is imperative to give the founders the same level of autonomy so that they innovate quickly and continue to operate their baby.

In August 2012, Dentsu acquired a 51 per cent stake in Taproot, whose co-founders Santosh Padhi and Agnello Dias continue to work at Taproot Dentsu. Again, in August 2012, it acquired iProspect, whose CEO was Vivek Bhargava. He is now CEO of Performance, Dentsu Aegis Network India.

Similarly, Dentsu’s acquisition of Webchutney in May 2013 brought on co-founder Sidharth Rao to Dentsu Webchutney. The July 2014 acquisition of Milestone Brandcom also brought founder Nabendu Bhattacharyya to the Dentsu stable, as did the acquisition of WATConsult in January 2015, with founder Rajiv Dingra.

Incidentally, the recent acquisition of Sokrati by Dentsu will have the three co-founders of Sokrati — Ashish Mehta, Anubhav Sonthalia, and Santosh Kumar Gannavarapu — join the Dentsu team in India.