Close-Up: Newsmaker - TMW founders cash in on Creston's expansion

in the affluent environs of Chelsea's King's Road, to the marketing
services group Creston plc.

Paul Tullo, the board creative director, Richard Marshall, the business
development director, and Chris Warren, the managing director, along
with a handful of senior employees, are the shareholders in what was the
UK's largest remaining independent DM agency.

This is set to change with Creston, the owner of a portfolio of agencies
including Delaney Lund Knox Warren & Partners and the PR business Nelson
Bostock, offering a total that could reach £38.3 million for TMW
and its sister operation, the print and production company Columbus.
Creston is paying £19.3 million in cash and shares for TMW, plus
£2 million for Columbus.

A further £17 million will be payable to the TMW shareholders,
dependent on profit targets being hit over the next three years. In a
separate deal, Creston is also paying £37.2 million for the
research company ICM Research.

Creston's chief executive, Don Elgie, cites TMW as "best of breed"
within its sector. His interest in the agency began six years ago, when
he was looking to put together the marketing services group that
eventually became Creston. An initial meeting with Warren did not lead
to anything, but a year ago Elgie was back in touch. Talks intensified
in recent months and an agreement was reached last week.

Elgie addressed the TMW troops last Wednesday evening, but Marshall is
at pains to point out that this was not the cue for wild
celebrations.

"The nature of the business is to remain true to itself. There's been no
guzzling of Champagne going on - this is a hard-working agency," he
says.

Marshall explains: "It's a period of quiet celebration. We didn't know
how people would react. There could have been the reaction that here are
three rich old devils disappearing into the sunset. But we've been
comforted by the fact everybody has so far been supportive."

So what is Creston getting for its money? In short, a top-ten direct
agency with a loyal and expanding client base; more than 200 staff; and
profits in 2005 of £3.1 million. Key clients such as British
Airways and Diageo have been with it for many years and an impressive
new-business run last year added the likes of Lloyds TSB, GNER, Home
Choice and the Energy Savings Trust.

TMW has a good reputation in the DM world, based on consistency and work
that produces strong results for clients; an agency that in its own
market has similar values to its new sister agency DLKW.

It might not be bunched among the creative hotshops, but then TMW has
been more consistently profitable than some of the more fashionable
independents.

Creston hopes its strength in data and digital will add something new to
its group offer and industry experts seem to think it represents good
value. The terms of the deal for TMW Group mean Creston is paying a
multiple of 6.3 times profit before tax, highly competitive compared
with other recent deals made in the marketing services sector. One
reason for this might be that profits for TMW in 2005 rose by more than
800 per cent, growth that may prove impossible to match year in, year
out.

Marshall admits TMW had been courted by most of the major holding
companies before doing the Creston deal. One source says Omnicom was
very impressed by TMW and the agency ticked all the right boxes in terms
of financial performance. However, the source said Omnicom had concerns
about the age of the founders (Warren and Marshall are 48, while Tullo
is 49) and their ongoing commitment to the business.

However, Marshall is adamant the founders' passion is unabated: "One of
the proofs we are committed to the business is that part of the
remuneration is in sizeable shares in Creston itself, so we have an
imperative to grow TMW and contribute to the growth of Creston."

So why sell to Creston when larger groups were also interested? "It was
a big emotional thing for us that we joined a group that was capable of
preserving the culture and style and the way we do business," Marshall
says. "The partners have built a certain DNA and it was a major
attraction to be able to keep this and to have no interference from the
group company."

Observers say that directors of businesses that join Creston have
considerable input into its future direction through positions on its
operations board.

Jim Surguy, the senior partner at Results Business Consulting, which
advised on the DLKW sale to Creston, says: "Creston is not in the
business of buying broken or turnaround companies - its criteria are
strong management and strong profits of more than £1 million. And
almost anybody with a fair chance will have tried to buy TMW - it has a
very good reputation in its market."

HOW THE DEALS COMPARE
TULLO MARSHALL WARREN
Date: April 2006
Purchaser: Creston
Potential total payment: £38.3m
Up-front payment: £19.3m
Pre-tax profit (to Dec 05): £3.37m
Multiple: 6.3
Details: Creston's initial £19.3 million outlay for Tullo Marshall
Warren sees it paying a multiple of 6.3 times on pre-tax profit - a
highly competitive multiple compared with other recent deals made in the
marketing services sector. The TMW partners have a three-year earn-out
deal.

GLUE LONDON
Date: August 2005
Purchaser: Aegis
Potential total payment: £14.1m
Up-front payment pounds: 5m
Pre-tax profit (to Dec 04): £239,000
Multiple: 20.9
Details: At face value, glue London's deal appears to be the best, with
Aegis paying a 20-times multiple based on the agency's 2004 pre-tax
profits. The deal, which comes with a three-year earn-out, was struck on
projected earnings, with the agency predicting turnover of £4
million for 2005.

MCBD
Date: August 2005
Purchaser: Cossette
Potential total payment: £27m
Up-front payment (for 51 per cent): £7.8m
Pre-tax profit (to June 04): £553,747
Multiple: 7.0
Details: Cossette initially took a 51 per cent stake in Miles Calcraft
Briginshaw Duffy, with the option of taking a further 24 per cent after
three years and the final 25 per cent two years later. The four partners
will need to double the size of the business within the allotted five
years to make the full £27 million.

VCCP
Date: July 2005
Purchaser: Chime
Potential total payment: £30m
Up-front payment: £14.5m
Pre-tax profit (to Jan 05): £913,163
Multiple: 15.8
Details: The VCCP deal sees half the £30 million total paid by the
creation of 25.5 million shares that the partners cannot sell for 18
months. The four founding partners each owned a 20 per cent stake in the
company, while 19 employees shared the final 20 per cent stake.

DLKW & PARTNERS
Date: February 2005
Purchaser: Creston
Potential total payment: £38.2m
Up-front payment: £19m
Pre-tax profit (to March 05): £2.04m
Multiple: 9.3
Details: Creston's deal with Delaney Lund Knox Warren & Partners could
see Mark Lund, the chief executive, and Greg Delaney, the chairman, walk
away with £6 million each if the agency achieves three-year
targets. The remaining partners - Tom Knox, Gary Betts, Richard Warren
and Malcolm Green - all stand to gain as much as £3 million each.

Note: All multiples have been based on up-front payment divided by most
recently filed pre-tax profits at Companies House.