Sorrell, Martin S. (1945- )

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Martin Sorrell was born Feb. 14, 1945, in London. As a student at the University of Cambridge in the 1960s, Mr. Sorrell wrote for New Cambridge, an alternative paper, and covered the 1964 U.S. Democratic National Convention in Atlantic City, N.J., for that publication.

In the late 1970s and early '80s, however, Mr. Sorrell gained considerable experience in corporate acquisitions while at ad agency Saatchi & Saatchi. A brilliant financial statistician, he engineered the brothers Maurice and Charles Saatchi's acquisitions of other agencies, marketing research firms, international management consulting firms and public relations agencies, until Saatchi & Saatchi became one of the largest agencies in the world.

Mr. Sorrell also invested in a company called Wire & Plastic Products, which manufactured wire shopping baskets.

In 1986, he left Saatchi & Saatchi to work at WPP, where, as chief executive, he began to expand the company's holdings. By the end of the year he had purchased several small firms that specialized in marketing services and renamed the company WPP Group.

In 1987, he proposed to purchase the JWT Group, which owned, among other ad agencies, J. Walter Thompson Co. JWT was one of the oldest and largest ad agencies in the U.S. Although senior executives at JWT disagreed among themselves about the initial proposal, Mr. Sorrell offered $566 million, which they eventually accepted. As a result, Mr. Sorrell and WPP acquired one of the largest advertising agencies in the world, along with Hill & Knowlton, one of the largest public relations agencies in the world, and MRB Group, one of the largest marketing research firms.

But the takeover had repercussions. Mr. Sorrell angered Dick Lord, who headed Lord, Geller, Federico, Einstein, a JWT Group subsidiary since 1974. Mr. Lord and five other executives resigned and started another agency, Lord Einstein O'Neill & Partners. Within a year, JWT lost several major accounts, which resulted in more than 100 employees losing their jobs. Some of these accounts and employees went to Lord Einstein, which ultimately prompted Mr. Sorrell to file a suit against Mr. Lord in which Mr. Sorrell claimed that Mr. Lord had sabotaged Lord Geller. Mr. Lord countersued, claiming that Mr. Sorrell was interfering with his new agency.

Mr. Sorrell was derailed only temporarily in his efforts to amass more businesses. Although he had purchased several firms before he announced a proposal to acquire the Ogilvy Group in 1989, it was the latter move that captured the attention of the business press. For several months before he announced an offer, Mr. Sorrell watched while the media speculated about a bid, a strategy that caused the value of the company's stock to increase.

Executives at Ogilvy Group reacted as had those at JWT Group. David Ogilvy emerged from retirement to oppose the takeover, but Mr. Sorrell again offered more money—$864 million—and eventually Ogilvy succumbed.

Once the deal was finalized, many in the industry claimed that Mr. Sorrell had paid too much, a criticism that had also been levied earlier about his acquisition of the JWT Group. (When Mr. Sorrell purchased JWT Group, the company's revenue had been $580 million. By the time he purchased Ogilvy Group, JWT Group's revenue had increased to $665 million.) Ogilvy Group came along with Ogilvy & Mather Worldwide and Research International, and its addition made WPP Group the world's No. 2 advertising, public relations and marketing conglomerate.

Prior to 1991, WPP's stock increased in value by 2,000% in two years. Like other marketing communications holding companies, however, WPP experienced financial problems in the early 1990s. Mr. Sorrell had borrowed millions of dollars from numerous banks to acquire other businesses and, when agencies experienced a recession in the early '90s, WPP's agencies also felt the pinch. WPP's before-tax profits dropped almost 40% in 1991. The company's stock value dropped more than 10% over a period of a few months during the same year.

Also in 1991, in an attempt to placate lenders, Mr. Sorrell announced the restructuring of WPP's financing, the suspension of some shareholder dividends and a decrease in other dividends. The conglomerate's agencies acquired more new billings than those of any other global firm in 1991, and its creditors postponed the company's repayment on the loans, which totaled almost $1 billion, until 1993.

By 1992, however, WPP had not rebounded as Mr. Sorrell expected, and he was obliged to renegotiate with WPP's leading bankers and shareholders. He succeeded in heading off two consequences that might have been his downfall, namely, the takeover of a substantial stake in WPP by banks willing to write off the company's almost $300 million of debt and a sharp decline in the value of WPP stock.

By 1995, Mr. Sorrell had cut WPP's mountain of debt in half and before-tax profits had increased considerably. By the following year, the company's debt was down to about $260 million, while profits prior to taxes were up 40%, or more than $100 million.

Mr. Sorrell continued to expand WPP. In 1997, the company opened Hong Kong-based MindShare, the merged media operation of JWT and Ogilvy, as well as Savatar, a U.S. technology marketing and consulting firm. WPP also invested in businesses in Europe and Asia.

In 1998, WPP acquired consulting and marketing firms in the U.S., Canada and England, including Conway/Milliken, a research company, and Goldfarb Consultants, an international marketing research firm.

In 1999, WPP Group acquired Intelliquest Information Group in the U.S. as well as other marketing communications agencies in England. That same year the conglomerate's pretax profits were more than $200 million and Mr. Sorrell revealed his controversial "Leadership Equity Acquisition Plan."

The plan proposed to reward 15 senior executives, including Mr. Sorrell, with a payout of $100 million or more at the end of five years.

According to terms of the plan, Mr. Sorrell and the other executives would invest $20 million worth of WPP shares in other ventures. At the end of five years, the stock was to be returned, plus bonuses, depending on how well their investments performed.

In 2000, Mr. Sorrell and WPP purchased agency giant Young & Rubicam for $4.2 billion in stock, then in 2001 bought Tempus, a media-buying group, for $491 million. In 2001, WPP's four chief agency networks were Y&R, Ogilvy, JWT and Red Cell, the former Conquest.

In August 2003, WPP acquired Cordiant Communications Group, parent of Bates Worldwide and various marketing services companies.

For 2003, WPP Group was the world's second-largest advertising organization with worldwide revenue of $6.8 billion, up 16.9% from 2002. In the U.S., it had revenue of $2.8 billion, up 12.8% from 2002. Its J. Walter Thompson Co. was the leading U.S. agency brand, with U.S. revenue of $456.2 million, up 15.9% from 2002.

Biography

Born in London, Feb. 14, 1945; earned B.A. at University of Cambridge, 1966; earned M.B.A. at Harvard University, 1968; earned M.A. at Cambridge, 1970; hired as a consultant at Glendinning Associates, Westport, Conn., 1968; moved to Martin McCormack Organisation, London, as VP, 1970; named director, James Gulliver Associates, London, 1975; appointed group finance director, Saatchi & Saatchi, London, 1977; purchased stake in Wire & Plastic Products, 1985; became group chief executive of renamed WPP Group, London, 1986; knighted, 2000.

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