What’s in a name? Plenty.
Just ask people who have to compete against their own names. These entrepreneurs can face uncertain, confused customers, as well as harsh competition from businesses they no longer own that still bear their monikers.
Consider what happened to executive recruiter Russell S. Reynolds Jr. at a recent cocktail party in Greenwich, Conn. A guest thumped him on the chest and bragged, “I just gave your firm five searches.”
Mr. Reynolds quickly realized the man meant Russell Reynolds Associates Inc., the firm he founded in 1969 and led until he sold a controlling stake in 1993. “I’m sure they will do a good job,” Mr. Reynolds replied. “If it doesn’t work out, let me know.” These days, Mr. Reynolds is chief executive of RSR Partners, a search boutique he estimates is 1/100th the size of his former company.
The conundrum is surprisingly common at service firms, from finance to advertising and consulting. Founders often name companies after themselves. When they leave, they typically agree to leave the name of the firm behind, and they sometimes agree not to compete against it for a time. Often, though, the entrepreneurial bug strikes again.
Such encores are risky. “You are more prone to failure,” warns Charles Fombrun, head of the Reputation Institute, a research and consulting firm. He says executives must walk a fine line between exploiting their old company’s brand and forging a fresh identity.
Executive-pay adviser Pearl Meyer spent 11 years building her name into a well-known brand before selling Pearl Meyer & Partners in 2000. Ms. Meyer planned to stay at the firm, and says she “stupidly” promised buyer Clark Consulting that she wouldn’t use Pearl, Meyer or her initials at another business. “The prospect of my leaving never occurred to me,” she explains.
Five years later, Ms. Meyer and four partners resigned to start a rival pay consulting firm. Constrained by the sale agreement, the group named the new firm Steven Hall & Partners after its managing director.
Mix-ups persist over Pearl Meyer the adviser and Pearl Meyer the company. At conferences, “people charge up to me and criticize me for things I didn’t do,” Ms. Meyer says. Her typical retort? “I’m Steven Hall. What are you complaining to me about?”
David Swinford, president and chief executive of Pearl Meyer & Partners, says that when Ms. Meyer left the firm, she urged colleagues to keep doing “good work so they wouldn’t embarrass her name, and we try to do that.” Mr. Swinford says the firm has grown significantly in the 22 months since Ms. Meyer left.
Fashion-industry founders often negotiate lifetime royalties when they sell their eponymous companies, says Suzanne Hogan, chief operating officer for Lippincott, a brand-strategy consulting firm. “In retrospect,” Ms. Meyer says, “it would have been a good tactic.”
Founders and their descendants employ a variety of naming tactics when they go into business against their own name. British ad pioneers Maurice Saatchi and his brother, Charles, had to win a court battle to use their name at a new agency after being forced out of Saatchi & Saatchi, once the world’s biggest agency. They set up M&C Saatchi in 1995. Clients grasped the difference because “we were the Saatchis with the Saatchis,” recollects Jeremy Sinclair, the chairman.
Saatchi & Saatchi, now a unit of France’s Publicis Groupe, disagrees. “Maurice and Charles Saatchi have not really made it outside of London,” says Kevin Roberts, Saatchi & Saatchi’s world-wide CEO.
Jerry Della Femina, another well-known advertising name, agreed not to use his surname for five years after quitting Della Femina McNamee in 1992. He soon was back in business, as Jerry Inc. That agency is now known as Della Femina Rothschild Jeary and Partners. His former employer no longer uses his name. Seeing Della Femina on the door again “is like living forever,” he quips.
Alexandra and James Lebenthal left Merrill Lynch & Co. in 2005 after it dropped their family brand name. The Lebenthals sold their municipal-bond firm, founded by James’s parents in 1925, to MONY Group Inc. in 2001. Merrill later acquired the firm from a subsequent owner and wouldn’t let the Lebenthals use their name in a new business.
Last fall, the father-daughter team formed Alexandra & James Co. The unit of Israel Discount Bank of New York focuses on municipal bonds and wealth management. “We’re the same people” who ran Lebenthal & Co., Ms. Lebenthal observes. “We’ll still get traction and attention.”
To reinforce the connection, Alexandra Lebenthal runs newspaper advertisements with a custom-designed typeface that the family firm employed for decades. An Alexandra & James brochure will soon proclaim, “The legend lives on,” below photos of the Lebenthals.
Dr. Fombrun questions such strategies. He urges founders and family members starting over to differentiate their new brand from a prior concern. Failure to create a distinct identity prolongs customer confusion and “undermines the creation of real value,” he says.
Some entrepreneurs wonder what the fuss is about. Private-equity magnate Thomas H. Lee last year left Thomas H. Lee Partners, where he was the founding partner. He now runs Thomas H. Lee Capital Management LLC, a closed-end concern making hedge-fund investments, plus Lee Equity Partners LLC, a private-equity firm. “There is no confusion in the marketplace,” he insists. “People know who is who.”
In finance, private equity is an asset class consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange.
A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. Each of these categories of investor has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new-product development, or restructuring of the company’s operations, management, or ownership
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