Is WPP in its current form a viable business without its founder, CEO and driving force Sir Martin Sorrell?
We’re about to find out.
The company is an agglomeration of more than 400 separate firms whose activities range from advertising to public relations, to market research, to marketing.
People might have speculated about the potential value that could be delivered through carving bits out when he was in charge, but it was never going to happen.
Sir Martin endured the odd reverse at the hands of his investors, notably over the eye popping pay packages he and his executives enjoyed, but most of the time he was able to swat his critics aside, including when they expressed unhappiness over the lack of a succession plan.
The latter may now contribute to the unravelling of what he built when he took the helm of Wire & Plastic Products only to turn it into the world’s biggest advertising company.
By now you probably know the background: over the weekend the WPP CEO stepped down after 33 years at the top in the wake of misconduct allegations against him.
The judgement of the company is that the affair is now over and it does not intend to publish any report, apparently viewing Sir Martin’s exit as drawing a line under the issue. His departure is being treated as a retirement.
Chairman Roberto Quarta will aim to keep things steady by taking on his executive responsibilities until the board can settle on a replacement, with Mark Read, who heads WPP agency Wunderman, and Andrew Scott, WPP’s corporate development director, becoming joint chief operating officers.
It’s highly unlikely that anything much will happen before then but the battle lines will quickly be drawn afterwards.
Kantar, the researcher, is seen as one of the more obvious targets for divestment, with numbers like £3.5bn being suggested for its potential value and no shortage of possible bidders.
That may just be the start of it. WPP, which has struggled of late, could present a tempting target for one or more of the activist investors which have been so busy in corporate Britain of late.
How Sir Martin, whose family still owns 2 per cent of the business and could see share based bonuses coming his way for some years to come, will view that is anyone’s guess unless and until he makes his feelings known.
He might. It’s not just his entrepreneurial and deal making skills that have marked out his tenure by comparison to the overpaid hirelings who run most of the FTSE 100’s other constituents. It is his abilities as a communicator.
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On the other hand, he may just decide to flip off his critics by starting a new business. There was no non compete clause in his contract so he’s free to do so.
Some have made a case against this by pointing to Sir Martin’s age – he is 73. They underestimate him at their peril. This is not the sort of person that quietly sails off into the sunset.
The one certainty in all this is that we haven’t heard the last of Sir Martin Sorrell.