LONDON—Cordiant, the troubled advertising and communications holding group, is expected to sell its Financial Dynamics unit—parent to U.S. investor relations firm FD Morgen-Walke—to its management as part of a deal to raise much-needed cash.
According to British newspaper reports, as many as 70 executives at Financial Dynamics are expected to take a share in the company, which will likely be bought back from Cordiant for between £20m and £25m, just a fraction of the £200m it cost to acquire.
The deal is being led by chief executive Charles Watson, and Andrew Lorenz, the former Sunday Times business editor, and a U.K. venture capital firm is believed to be prepared to put up the cash.
The deal is expected to be the first of many for new Cordiant chief executive David Hearn, who replaced the ousted Michael Bungey last month. The company’s banks are owed an estimated £200m and are believed to be pressing for a break-up.
Financial Dynamics is believed to be one of the better performing parts of the Cordiant empire, which also includes advertising agency Bates Worldwide. According to Watson, last year was a record year for new business. The firm also began to realize synergies between its U.K. and U.S. operations, installing a British management team at the former Morgen-Walke.
Financial Dynamics was initially created as a unit of Grayling, but after one of its founders was killed in a car crash, management bought the firm, and then sold it to investor relations powerhouse Broad Street. Another MBO and subsequent sale followed, and Financial Dynamics became part of the GGT advertising group, before being bought back yet again by chief executive Nick Miles and chairman Tony Knox. Finally, management sold again to Lighthouse Holdings, which in turn sold to Cordiant.
Miles left the business last year, along with his colleague Hugh Morrison, following a dispute with Bungey.