TMP arranging IPO to finance acquisitions

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TMP Worldwide, the country's largest Yellow Pages agency, is trying to raise $80.5 million through an initial public offering that agency-watchers believe will be used to finance more acquisitions in the recruitment field.

According to papers filed Sept. 23 with the Securities & Exchange Commission, capital from an IPO will help the New York-based agency repay some of the $114.3 million debt load accumulated over the past three years as it acquired stakes in or bought 34 different Yellow Pages and recruitment-marketing shops.


But TMP, an employee-owned company where President and Chairman Andrew McKelvey has an 80% stake, is also said to be positioning itself to pick up other recruitment businesses spun off as a result of consolidation among global agency networks.

TMP began investing in the recruitment services market in 1993, and two years later had a 7% share of that business.

The 29-year-old TMP has established itself as a leader in the $10 billion Yellow Pages advertising segment, where agencies handle only about 15% of ad placements. TMP clients include Ford Motor Co., MCI Communications Corp., Midas International Corp., Pizza Hut and United Van Lines.


According to the SEC filing, TMP reported gross billings of $596.1 million in 1995, including $123.9 million in commissions and fees. Net income was $3.2 million for 1995. The agency reported gross billings of $418.5 million in 1994, $86.2 million in commissions and fees, and a net loss of $2.5 million for 1994.

Operating income was $18.9 million in 1995 and $6.8 million in 1994.

Earlier this year, TMP executives told Advertising Age the agency planned to continue the aggressive growth undertaken in 1994 and 1995.

If the IPO succeeds, after repaying debts the company would be eligible to borrow $54.4 million. During each of the past four years, TMP has spent between $8.7 million and $26.7 million annually on acquisitions.

The largest of those purchases was Australian recruitment shop Neville Jeffress, bought for $25 million this year. But there were also smaller buys, such as Dallas-based GTE Directories Corp.'s Yellow Pages business and the assets of U S West's Marketing Resources Group.

TMP also claims in the SEC papers to have major plans for the Internet. Among TMP's recent purchases is Adion Information Systems and its help-wanted site Monster Board.

The agency considers online classifieds a major growth area, since only 20%-to-30% of all job openings are listed in print media. TMP's Internet recruitment services have brought in $600,000 in monthly revenues since May 1995, according to the offering.

Copyright September 1996 Crain Communications Inc.

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