A few years back, David Kramer, CEO of Medical Broadcasting Company (MBC) reasoned that to take advantage of all the opportunities that lay before his firm, he would need more in the way of scale and resources. And so, quietly, he started looking for a merger or acquisition partner. Given MBC's digital-happy ways, the first name on Kramer's list was Boston-based Digitas Inc., parent of the interactive-first Digitas LLC and Modem Media agency brands.
“MBC had what I'll call a highly social network of clients among the top 10 pharmaceutical companies,” he recalls. “But we hadn't been able to grow to a point where clients with bigger budgets earmarked for the Internet were 100 percent comfortable going with us. So basically I knocked on Digitas' door and presented our resume.”
Unlike its holding-company peers, however, Digitas wasn't exactly acquisition-crazed; in its 26-year history, it had acquired only a single agency, Modem. Thus the Digitas-MBC courtship played out for more than 12 months as Digitas chairman and CEO David Kenny did his due diligence. “He was very, very deliberate about the whole process,” Kramer says.
The deal finally closed in January, vaulting MBC from an independently owned healthcare shop to a firm that more or less operates independently under the aegis of a holding company. Getting assurances as to its continued independence, not surprisingly, ranked among MBC's primary requirements in any acquisition scenario.
“Well, we have them in writing,” Kramer admits. “But much to their credit, the people at Digitas have been so true to their word all the way through. [The assurances] have been reinforced and consistently delivered upon.”
After the acquisition, MBC staffers all received new computers (“a profoundly happy moment,” Kramer cracks) and a training upgrade. “It's of a much higher quality than what Linda [Holliday, MBC president] and I would have been able to afford as independent entrepreneurs.” In addition, Kramer says that Digitas' extensive library of case studies has “helped generate bigger and better thoughts inside our company.”
The deliberate pace of the discussions helped both Digitas and MBC iron out most problems ahead of time, so it's been mostly business as usual for the acquired agency. In 2005, MBC added around 20 full-time staffers, upping the firm's head count north of 150. The company snared projects from Roche, Celgene and Pfizer, plus assignments from long-time clients Johnson & Johnson, Wyeth and AstraZeneca. Building on its interactive work on bipolar disorder-schizophrenia treatment Abilify, MBC added an oncology project from Bristol-Myers Squibb.
Further selling pharmaceutical manufacturers on the benefits of the interactive space tops MBC's to-do list. “I don't say this critically, but our industry is a late adopter,” Kramer says. “Pharma companies started with online tactics later than a lot of other industries, and they're still not as committed to them as they could, and should, be.” MBC should benefit in the days ahead: It can attempt to persuade skittish clients with examples of Digitas' work for American Express and Microsoft, not to mention its own digital efforts.
Up next for MBC: bulking up the interactive capabilities of existing clients, rather than pushing new business. However, Holliday expects some difficulty in finding top people to fuel the interactive push. “There just aren't that many who know both interactive media and healthcare,” she notes. “You can teach somebody healthcare, but it's hard to do and it takes some time. And it's not like clients are asking questions like, ‘What do you know about technology or online creative?' They want us to know their business.”