TPG’s Sodali & Co finding it tough to unite corporate spinners Domestique and Citadel Magnus

Mega deals to unite two of Australia’s best connected corporate spinners under the Sodali brand have proved a tough sell.

Sodali scooped up Citadel Magnus and Brett Clegg, left, in 2022, and a year later acquired Domestique, where Ross Thornton was chair.

It was a $9m bombshell. Ross Thornton’s decision to quit Sodali & Co on the last day of January sent shockwaves through the close-knit world of corporate communications. One of the best-connected spinners in Australia, Thornton’s decision to call time on his role at Sodali meant a staggered $9m payday was up in smoke.

The adviser to billionaires and CEOs had staked a paper fortune on a blockbuster deal which saw Domestique – where Thornton was chair – sold in December 2023 to Sodali, owned by private equity giant TPG.

The US-headquartered Sodali had already scooped up Citadel Magnus a year earlier, home to CEO-whisperer Brett Clegg, and a competitor to Domestique in strategic communications.

Within a year of Domestique joining Sodali, Thornton had taken extended leave amid concerns over the dysfunction and regional bureaucracy that insiders described as hobbling momentum within the business.

His return before Christmas and resignation two months ago has become a talking point across the gossipy industry. Rivals have questioned whether Sodali could bring out the best from some of the market’s most talented PR operators, while also keeping their sizeable egos in check. Now more seasoned operators are headed for the exit. Managing director Lachlan Johnston will soon depart while Catherine Strong is jumping ship to handle communications for an Australian corporate.

Lauren Thompson, a senior managing director, will take a year’s sabbatical.

Sodali’s operatives have advised some of the nation’s highest-profile billionaires, including tech titans Richard White and Mike Cannon-Brookes, retail rag trader Solomon Lew and business scion Ryan Stokes. The company has worked on deals worth hundreds of billions of dollars, including the $34bn pharmacy mega-merger between Chemist Warehouse and Sigma, and Brookfield-owned Healthscope’s battle for survival.

Premier Investments chair Solomon Lew is a Sodali client. Picture: NewsWire / Luis Enrique Ascui

The firm has worked with more than 75 per cent of Australia’s 100 largest listed companies and delivered 20 per cent revenue growth, year on year, for the last two years in an environment where deals are leaner than ever.

But when it came to agreeing to buyout terms with TPG, Domestique and Citadel Magnus struck very different deals, adding to tensions in the ranks.

Clegg and Citadel Magnus co-chair Peter Brookes had rolled their business into Sodali in a $50m deal. Thornton’s Domestique was soon to follow, in a $63m merger, entrenching two dominant players at the top of their game.

In typical style, the advisers charged with spruiking Australia’s biggest deals drove their own hard bargain. TPG would pay eight times earnings.

The first cab off the rank, Citadel Magnus, would deliver senior partners half of their $50m in cash, with the remainder to vest as equity in the new Sodali. Domestique would instead cut terms for 40 per cent cash, with the other 60 per cent in equity.

In retrospect Thornton saw this deal as a mistake, with trouble in the other arms of Sodali leaving the paper value of the equity in the operation a far cry from its expected real value.

Thornton’s abrupt exit was pitched as an opportunity for the spinner to focus on his recruitment firm Temple Executive Search, set up alongside Rebecca Tabakoff in 2013.

But few in the industry believe the consigliere can keep himself out of a deal or drama for long, despite Thornton’s protests that he wants to focus on Temple.

Thornton’s exit came after missing months of work at Sodali, from which he stepped out in late 2024, amid growing discontent over its direction.

The brewing financial trouble in Sodali’s American operations, dragged down by a downturn in the performance of proxy services, coupled with a desire for the Domestique and Citadel Magnus camps to return to their old way of running things rather than at the command of senior management was key to Thornton’s crisis of faith.

Face to face

The man called on to handle uncomfortable divorces, including the $1 amputation of PwC’s former government consulting arm Scyne, was now at a crossroads over Sodali.

Thornton tells those close to him his exit wasn’t tied to any tiffs with Clegg, but instead by an irreconcilable difference with international CEO Christian Sealey and TPG’s private equity overlords.

But others said there had been an increasing animus between Clegg and Thornton and their respective camps inside Sodali. Tensions are said to have thawed in recent months with the pair finding common ground over coffee catch-ups. Thornton declined to comment, while Clegg did not return calls.

Soon after, Sealey, Sodali’s CEO, would also be out, a year after engineering the tie-up.

Sealey had been given the chequebook by TPG, with the executive approaching a number of local communications firms, some of which rejected him, in a bid to build the communications empire.

His exit was the latest in more than 15 departures since the firm’s inception in late 2023 and would soon be followed by a clear-out among Sodali’s remaining staff in the following weeks.

Among the suite of changes as part of Sealey’s exit, Clegg was elevated as Asia-Pacific chair after a listening tour by global boss and former PwC partner Andrew Benett.

Sodali global CEO Andrew Benett

Benett, who toured Sodali’s Sydney domain this week, was installed in the top job after the firm’s founder, Alvise Recchi, moved to a board position.

Sodali’s deals for the twin communications shops, so big it involved the Foreign Investment Review Board, was the latest windfall for Clegg, who had previously held various roles in Fairfax Media and News Corp Australia.

Clegg had joined Citadel Magnus after an extraordinary falling out with rival spinner Sue Cato over 40,000 disputed shares in fintech Afterpay which delivered a $1.32m payday to Clegg but not Cato.

Clegg had failed to inform Cato of his windfall which ultimately ended up being worth more than $5m by the time Jack Dorsey’s Block lobbed its takeover bid for Afterpay.

9 Castlereagh St

The marriage of Clegg’s firm and Thornton’s Domestique was almost immediately complicated.

The two men locked horns, with ane org chart a trigger for a blow-up between the two leaders.

News of the strife, duly leaked to the media, was just as duly managed.

But no less than 12 months later, control of Sodali once again saw Clegg and Thornton facing off across the floor at level nine, 9 Castlereagh Street.

The strife was in part over Sodali’s top-heavy and overly bureaucratic approach to running operations. The earn-out dealsenforced by Sodali also grated.

In Domestique’s case much of the money was locked up and not to be paid out for years.

Thornton even admitted as much about his own ouster, noting on social media he was facing a case of “when a crisis manager can’t manage his own crisis”.

Complicating Thornton’s exit are tough five-year non-compete clauses sewn into the contracts for the firms, which would block the corporate whisperers from working with clients including Commonwealth Bank, Westpac, Woolworths, Woodside, Downer Group, or even the Catholic Church in a newly incarnated crisis communications operation.

Sodali has made an example of one former operative, taking legal action against former proxy solicitation and shareholder services adviser Marc Stanghieri, alleging he was in breach of his deed after setting up his own operation.

Former Sodali proxy figure Marc Stanghieri.

Stanghieri is one of the more than 15 staff to exit Sodali since late last year, alongside the likes of David McFadden, Justin Ford, Ben Walsh, Rakhal Ebeli, Andy Chan, Laura Reed, Colin Forbes, Prue Gillespie and Susan Redden Makato.

Complicating Sodali’s local footprint is how the firm handles conflicts of interest that under its previous guises would have seen work carved up between Domestique, Citadel Magnus, or other players in the local communications world.

Sodali has now found itself in the crosshairs of complex corporate situations like WiseTech. The firm was advising WiseTech’s board on how to handle its errant chief executive Richard White, while CEO confidante Helen Karlis and Clegg consulted with White on how to handle the media and the crisis engulfing him. Separately, it also handled a WiseTech shareholder survey.

Sodali advised WiseTech founder Richard White after he became embroiled in court action with wellness entrepreneur Linda Rogan. Picture: NewsWire

A spokesman for Sodali said: “We manage any emerging conflict situations with transparency. All client work is confidential to the direct team involved and this separation is strictly reinforced from an IT and information management perspective.”

Sodali has cultivated relationships with media figures, sponsoring columns and events.

Thornton has delved into his own media career, backing newsletter and podcaster The Squiz, which has partnered with Rampart, the publisher founded by Joe Aston.

Industry insiders also point to the problematic relationships that arise between key spinners in the Sodali shop and when the business is hired by known corporate adversaries of Sodali loyalists. The likes of Thompson, for example, are well known for her soothing of Lew, the Premier Investments potentate.

Bigger ticket

An array of high-profile bankers and CEOs say Sodali delivers the goods although others feel the bigger corporate spin machine lacks some of the magic delivered when the firms were independent.

Barrenjoey co-founder Guy Fowler lavished praise on Thompson in her former role, telling the Hearts and Minds cocktail party in a November 2023 speech “she works tirelessly all day on corporate transactions. Please vote yes for the Origin demerger. And she works tirelessly by night for us. So Lauren and Domestique thank you very much.”

Sodali senior managing director Lauren Thompson.

The culmination of the Sodali catastrophe has been the whirlwind visit by Bennet, Sodali’s global boss, who spent the week in town alongside global head of HR George Najarian.

Sources describe a number of Sodali staffers were shown the door during their visit, while others were offered deals and promotions in a bid to keep them in the tent.

Sodali’s debt services team was quietly disbanded but sources say the 90-strong strategic communications business maintains momentum, with more staff joining over the next few months.

But instead of joining Sodali’s Perth staff for after-work drinks, Clegg and Bennet were at Matt Moran’s Sydney Harbour fine dining fixture Aria.

Clegg and Bennett were joined by 15 CEOs and top bankers. Underlining its pulling power, CEOs included Hamish McLennan from REA, Cleanaway’s Mark Schubert, Boral’s Vik Bansal, Ampol’s Matt Halliday and investment banking heads from Goldman Sachs, Deutsche and Macquarie.

By Thursday, Bennet was gone, back to his American home base.

A rival communications figure says he was shocked but not surprised “by the implosion of ­Sodali”.

“At the end of the day, there were too many big personalities in bed together. It was never going to work,” he says.

As one Sodali insider put it in a nod to the famous war for biscuit company Nabisco, which was acquired by private equity group KKR, the barbarians are now inside and in control.