The chairman-CEO last week announced that, for the first time in privately held Y&R's 73-year history, it was selling a piece of itself to an outside investor, San Francisco buyout firm Hellman & Friedman.
Hellman is believed to be paying around $200 million for a 20% stake in the world's sixth-largest ad holding company.
IPO IN THE WORKS?
Some view the deal as Y&R's first step toward an initial public offering. Mr. Georgescu won't rule out the possibility, but claims an IPO is not currently on the agenda.
Mr. Georgescu gave several reasons for turning to an outside source of capital. Chief among them was giving insiders a greater stake in the future of Y&R.
"First and foremost, this will help us to better align ownership with the people who drive and will drive this company," he said.
Y&R will use some of the money to buy out several hundred employee shareholders, as well as some retiree shareholders, giving current senior managers a greater share of ownership.
"They need to feel this is their company, not just financially but emotionally," Mr. Georgescu said.
Since becoming CEO in 1993-when Y&R had declining billings and revenue and a poor creative reputation-Mr. Georgescu has repeatedly strayed from Y&R's traditional "all in the family" approach.
"We always look inside first. But our needs have increased dramatically in recent years. When we need outside talent, I'm not going to hesitate," he said.
Y&R Advertising's top two executives, Chairman-CEO Ed Vick and Vice Chairman-Worldwide Creative Director Ted Bell, were hired away from other agencies only a few years ago. Just two months ago, Mr. Vick hired Steve Davis as president-CEO, Y&R, New York, from J. Walter Thompson USA, Chicago.
"He is willing to adopt completely new approaches," said John Costello, senior exec VP-general manager of marketing at Sears, Roebuck & Co., a client Mr. Georgescu helped land just before his 1993 promotion.
BUILDING A `WAR CHEST'
Another reason for the deal with Hellman, Mr. Georgescu said last week, is to build a "war chest" for acquisitions, most likely in the realm of emerging technologies such as interactive and database marketing.
But, he cautioned, "We're not in a hurry. We want to be ready when the time is right, which isn't yet."
The Romanian-born executive spent seven years of his childhood in a Communist labor camp. He received no schooling during that time but attended Phillips Exeter Academy, Princeton University and Stanford University after he arrived in the U.S.
Mr. Georgescu, 56, has spent his career at Y&R, starting in the research department, where he developed a strong belief in the importance of listening to consumers.