New Paradigm Software Corp., New York, acquired Schoen, Kapelus and Cipriano Advertising, Harrison, NY, this month in a deal that pairs an Internet agency with one whose clients are in an Internet-hungry industry.
Under the acquisition agreement, New Paradigm will pay the partners of SKC Advertising 250,000 shares of stock and one-third of the agency's revenues over the next three years, less the liabilities it took on through the acquisition. The payout over the next three years will be through a combination of stock and cash. New Paradigm stock traded at $0.94 on June 8, a week after the deal was announced.
SKC Advertising expects its new parent will let it better serve its mainly travel- and hospitality-related clients, who have been eagerly embracing the Internet.
“Travel might be one of the industries making the most use of the Internet,” said Milton Kapelus, president and founding partner of SKC Advertising. “People want information on their destinations, and they are also using the Internet to make reservations and pay for tickets. It is all happening very quickly.”
Until now, SKC Advertising has carried out Internet work for clients but has handled only the creative aspects of the work internally. Technical work has been contracted to outside firms and free-lancers.
“Now, we can use New Paradigm for the technical aspects of Internet work. This greatly enhances our Internet capabilities,” Kapelus said.
SKC Advertising is the first in a string of acquisitions New Paradigm plans to complete in the next 18 months.
“We wanted to take our Internet experience and deploy it with an advertising agency that has executive-level and strategic-level relationships with its clients,” said Mark Blundell, CEO of New Paradigm. “While SKC isn't a large agency with a lot of clients, it has that type of relationship with its main clients.”
For future acquisitions, New Paradigm will look for other advertising agencies that specialize in working with clients in different industries, Blundell said. The agencies already are completing an agreement for New Paradigm to do work for one of SKC's clients. Meanwhile, SKC has started adding its creative services to the work New Paradigm is doing for clients, such as the animal health division of pharmaceutical company Novartis, the investment banking firm Josephthal and industrial equipment company Yale Industrial Trucks.
SKC will keep its name and retain its offices in Harrison. The companies already have achieved a few economies through attrition. The duties of a couple of administrative and financial employees who have left the company were re-allocated to others in the company, Kapelus and Blundell said.