No new investment for next two years, says Vivek Suchanti after exiting Scarecrow

India's go-to guy for creative start-ups, Vivek Suchanti, the Managing Director of Concept Communication, has sold his entire 51% stake in Scarecrow Communications to London-based M&C Saatchi, reportedly for Rs 100 crore.

The eight-year-old Indian independent agency will be called Scarecrow M&C Saatchi but would continue to be run by its founders Manish Bhatt, Raghu Bhat and Arunava Sengupta.

In an exit interview with BestMediaInfo.com, Suchanti refused to reveal the contours of the deal but said it wasn't only the amount that mattered but also the fact that the agency wanted to maintain its independence.

"Selecting a partner to go with is not purely driven by the amount of the deal. The agency wanted to maintain certain independence and that is why it chose to go with M&C Saatchi," he said.

Scarecrow was also approached by other networks such as WPP and Dentsu but the agency wanted a network that provided it autonomy.

As a part of the deal, M&C Saatchi will also help Scarecrow set up a new business if they see the potential in the Indian market. The agency is now looking to expand its footprint and hire more people.

Asked if there was a new venture in the works, Suchanti, who has significant investments in several other independent agencies, said the balance sheet of Concept Group was large enough to start an agency every year.

"There is always a plan in place but not for another two years," he said.

Excerpts:

When did you think in these eight years that the time has come to exit?

The purpose for me was never an exit. Most of the exits are defined by my partners. Scarecrow was one of our early investments and when they believed that they are ready to go to the next level with a global partner, things started moving in that direction. Typically any of these agencies need support for the first three years. Later on, they need a little bit of reassurance that someone is backing them.

Was the declining profit margin a reason for the exit?

When someone looks at any investment, it is never the short term but the future prospects. So, I do not think it has anything to do with the declining margin.

Was this exit exactly as you expected?

Yes. This did not happen overnight. It has been in the deliberation for two years. Selecting a partner to go with is not purely driven by the amount of the deal. The agency wanted to maintain certain independence and that is where they chose to go with M&C Saatchi.

What percentage of stake did you have at the time of exit?

I have had majority stake in all my ventures in the communication space.

What next for you after this exit?

Most of these agencies do not need large amount of monies as investment and Concept Communication’s balance sheet is large enough to start an agency every year.

So, people who want to start their own agency can approach you now.

(Laughs). People use to approach me even before this exit. Naturally, we look at the opportunities coming along our way but nothing planned as of now.

At times, you have been called poor man's Martin Sorrel because of the series of investments you made in the communication industry. How would you react to that compliment?

Be it the communication businesses or outside communication, all the investments are made by Concept Communication and not in my personal capacity.

When can we hear the next investment by Concept?

There is always a plan in place but not for another two years.

Info@BestMediaInfo.com