Omnicom's Safir bet

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Howard Safir was in Los Angeles this spring, but not to attend the Oscars. When he was the New York City police commissioner, he was raked over the coals for traveling to the Academy Awards on a corporate jet with former Revlon CEO George Fellows. Mr. Safir is now a private citizen and a businessman, and he can travel on any corporate jet he wants to without fear of rebuke.

"George Fellows was my friend then, was my friend before and is currently my friend," said Mr. Safir, sitting tall and granite-like in his lofty 20th floor Madison Ave. office.

Mr. Safir, 60, is chairman-CEO of SafirRossetti, a corporate security, investigations and intelligence startup owned by himself, his partner President Joe Rossetti and majority owner Omnicom Group. Mr. Rossetti, 68, is the former vice chairman of security firm Kroll Associates; before that, he was chief of worldwide security for IBM Corp. Another close friend of Mr. Safir's is Omnicom President-CEO John Wren. Now backed with Omnicom's money, Mr. Safir is poised to close on deals to acquire security firms in Dallas and London. In April, he was in Los Angeles closing a deal to buy Noesis, a private investigation and intelligence firm.

Why is an ad holding company investing in security and investigations? Well, there's good money to be made. According to Freedonia Group, an international industry-research firm, revenue in the $56 billion world of security and investigations business is expanding almost 9% a year.

Corporate security and investigations in some ways complement the marketing services offerings that Omnicom and rivals have assembled in recent years. Since consolidation has left few big ad agency or marketing-services ventures to be acquired, it's also not surprising to see holding companies moving into new services to maintain the growth they have promised Wall Street .

"These marketing companies tend to look at different areas in which they can expand their business like any other company out there," said an advertising investment analyst who requested anonymity. "And as long as they are not spending much capital to do so, we don't get overly concerned about it."

Even in a down market, or perhaps thanks to one, security and investigations companies do pretty well. Kroll Associates, the market leader with 55 offices in 17 countries, reported net sales of $207.9 million last year, up marginally from 2000's $205.6 million. But Michael Cherkasky, Kroll's president-CEO, projects double-digit growth this year. For its first quarter, Kroll's profit rose to $2.3 million from $470,000 in the year-ago period. The company's net sales increased to $56 million from $50.8 million. Kroll attributed the growth largely to a strong demand for its services "as a result of world events."


Before going to the police or FBI, many corporations cope with security breaches, fraud, bribery, extortion and other legal and criminal matters through crisis-management teams at their shops. Omnicom, in particular, owns many PR agencies, including Fleishman-Hillard, Ketchum and Porter Novelli International. WPP Group's Ogilvy Worldwide set up Counter Threat, its own security and investigation division, early this year to handle its clients' security needs.

According to an executive at an investment company, who requested anonymity, "When you find yourself in a situation, you either use someone else [for security] ... or you have your own operation if you are big enough. Presumably, Omnicom and Ogilvy consider themselves big enough now to do it themselves. I imagine there is a lot of money in it for them now, too."

Finally, the competitive set in the security and investigations market, dominated by Kroll, is limited to little more than a dozen international players such as Decision Strategies (formerly SPX Fairfax International), Control Risks and Pinkertons, capable of handling the needs of Fortune 500 clients. The field is relatively wide open for newcomers like SafirRossetti, which is banking on the brand power of Mr. Safir's reputation as the law-and-order cop who cleaned up New York while serving as police commissioner from April 1996 to August 2000.

"People know who I am," said a steely-eyed Mr. Safir. "I am the face of the company. I am the rainmaker. I bring in business. Between John [Wren] and I, we are building the company into something that will become the gold standard in the business."

What differentiates SafirRossetti from its competitors is its focus on protection.

"We do everything that Kroll does, but we also have an emphasis on physical security," Mr. Safir said. "This is a market that is really growing, unfortunately, as a result of Sept. 11. People now realize something that ... security is no longer an option."

closing deals

Mr. Safir is on the verge of snapping up a security-engineering firm in Dallas, and he's negotiating with an investigation outfit in London. One likely candidate is Bishop International, a shop known for its trademark and patent-protection work. Mr. Safir declined to comment on whether he was talking with Bishop.

He is also just beginning to shop around for a satellite office in Hong Kong. He hopes to close on all these deals by June. Neither Mr. Safir nor Omnicom would disclose the financial details of their acquisitions.

Kroll, however, is also shifting its business plan from investigations to a focus on the security market. "The security-design world has seen explosive growth, close to 50% and it has long-term legs," Mr. Cherkasky said.

Mr. Cherkasky said the "old traditional investigation portion of the business," which makes up about 35% of its business, was down last year, but it is coming back.

men in suits

Which is where a company like Noesis comes in. Now known as the West Coast offices of SafirRossetti, the company is run by former FBI agents who met each other at the FBI academy: Tom Cowley 50, who mans the L.A. office, and David Cook, 48, based in San Francisco.

In true PI parlance, Mr. Cowley is called "the accountant," because he is a CPA, and Mr. Cook is "the mouthpiece" because he has a law degree. Both men are highly regarded investigators who spent many years in the bureau before setting out their own shingle. "We've taken the profession out of the alleyway and into the boardroom," Mr. Cook said.

According to Messrs. Cook and Cowley, 30% of Noesis' business is due-diligence work, another 30% is litigation support and about 40% is work for U.S.-based multinationals. Currently, Noesis has a staff of nine.

Back in New York, Mr. Safir has 25 employees, but he's knocking down walls to make room for more.

"We're hoping that after we do these acquisitions at the end of spring we'll have over 200 employees," Mr. Safir said. "One of the things I tell people who are coming in here looking for a job-and we are in a hiring mode at the moment-in this company we all do windows, including me." Mr. Safir's steely blue eyes appeared to twinkle.

Fast Facts

Company: SafirRosetti

Chairman-CEO: Howard Safir, former New York City police commissioner

Majority ownner: Omnicom Group

Size of security industry: $56 billion

Annual growth rate: 9%

Competitors: WPP's Ogilvy & Mather Worldwide's Counter Threat, Kroll Associates

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