Sodali PR supremo Brett Clegg almost spoiled $50m Citadel Magnus deal: Sources
Sydney spinner Brett Clegg’s attempt to cut a better deal in the $50m acquisition of Citadel Magnus by Sodali, the firm he now chairs in the region, almost toppled the transaction.
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Spinner Brett Clegg’s eye for a deal put at risk the $50m acquisition of his former public relations firm Citadel Magnus when it was under offer from Sodali, the mammoth PR consultancy he now leads.
Clegg’s actions potentially jeopardised the TPG-backed Sodali offer by approaching rival PR group Domestique with an offer to defect, multiple sources including current and former colleagues told The Australian.
They said Sodali openly questioned whether to continue with the Citadel Magnus acquisition, worn down by Clegg’s alleged antics throughout the negotiations.
One detail in the broader imbroglio that only came to light after the deal was sealed is a rumoured meeting with Domestique principal Ross Thornton.
But as word spread of Clegg’s tactics, he made the ranks of Citadel Magnus nervous their $50m private equity pay day could collapse.
Current and former colleagues claim Thornton and his Domestique managing director Jim Kelly were approached by Clegg, who sounded them out about teaming up.
Without Clegg, the Sodali offer for Citadul Magnus would likely have crumbled.
As the PR industry consolidated, Sodali not only bought Citadel Magnus but merged with Domestique in a $63m deal almost a year later.
Thornton, who quit Sodali last year, and Clegg deny any meeting took place.
Instead, Thornton suggested talks between Clegg and Domestique happened, but under different circumstances. Thornton’s timeline puts the alleged meeting after Clegg’s falling out with a previous business partner, Sue Cato, in 2019 - almost three years earlier than industry lore.
Clegg, asked to comment on the rumoured approach to Thornton and threats to quit Sodali, replied: “The claims are completely false, do not withstand scrutiny and have been denied directly by multiple parties (whose integrity, given their direct involvement, could not reasonably be doubted.”
He could not be reached by phone.
Kelly, the Domestique MD, wrote: “I agree with Brett”.
Clegg proposed to Thornton he get an equal share to Thornton’s 26 per cent holding in the Domestique partnership, based on sources’ accounts of the meeting both dispute took place.
Those sources said Thornton, who set up Domestique in 2013, couldn’t accept this being a firm founder.
Clegg was one of several senior equity holders at Citadel Magnus at the time. He was titled as a founding partner, alongside Peter Brookes his current Sodali colleague, despite joining later.
Clegg, they said, proposed to Thornton how much he could secure for Domestique.
Sodali agreed to pay 8 times earnings for Citadel Magnus, aiming to assemble the biggest corporate communications firm in Australia with TPG’s imprimatur.
Citadel Magnus’ owners stood to pocket nearly $25m upfront, and the remainder as equity in the new Sodali over four years.
Sodali is inside board rooms across the market, it offers lobbying and proxy operations, and advises clients like Richard White, Healthscope, and the Australian Securities Exchange.
However, Sodali was rejected the first time it tried to buy Domestique on account of a low-ball offer.
They ended up striking a $63m deal. When Thornton exited, he did so leaving nearly $8m in equity behind.
When negotiating for Citadel Magnus, he got titled Senior Managing Director, the highest non-executive rank at Sodali. But what he wanted was APAC chair.
This was the source of another point of tension with Citadel Magnus’ new overlords and allegedly compelled Clegg to fire off an email missive announcing he would leave Sodali upon discovering he shared the same job title with others.
He spent almost a week in New Zealand, before returning to the firm.
He was no fan of 9 Castlereagh Street, Sodali’s digs, alleging it a “chicken coop” without parking, and again threatening to walk, colleagues at the time recalled.
This happened again as recently as late 2023 after clashing with Thornton over a new organisational chart following the $63m Domestique integration. Thornton apologised in writing.
Thornton was replaced by Lauren Thompson and Brookes as co-head of the Strategic Communications business.
Finally, Clegg wrote to Sodali’s new global boss Andrew Benett, a former PwC partner who had been elevated amid a global shakeout as TPG sought change within its communications consultancy prize.
The pair met personally when Benett spent a few weeks in Australia with the local Sodali team.
Thornton, arguably like Clegg, believed Domestique was worth more than Sodali paid. His reference for this was the two previous firms he’d successfully sold. Domestique was the third.
By the time Thornton quit Sodali, he had been out of the tent for several months already.
Clegg’s email to Benett is said to have been behind the CEO’s intervention in the local operation and the exit of former Sodali boss Christian Sealey earlier this year.
With Benett’s support, Clegg was firmly ensconced as chair and his star inside Sodali rising.
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