Gershon Kekst: master of the 'saykhl' business.

AuthorKaback, Hoffer
PositionIncludes related article on the Walt Disney Co. buyout - Founder of Kekst and Co. - Cover Story

Saykhl is a good thing to have. That's why CEOs and boards for 30 years have turned to Gershon Kekst for advice in takeover and other sensitive communications situations.

Early in my December 7, 1998, conversation with Gershon Kekst, founder of Kekst and Company - the No. 1 public relations player in the takeover world - he walked me over to a framed document on his office wall. It was a typed letter from Harry Truman to John Steelman ("The Assistant to the President" during Truman's Administration). At the bottom, Truman hand-wrote these words: "Public relations can't be learned except by experience."

That is Gershon Kekst's own motto. He firmly believes that the public relations business will never possess a "body of knowledge." It is, instead, judgment and experience that matter.

For almost thirty years, Kekst and Company has been a major force in the takeover arena. Gershon Kekst and his partners have worked with or against virtually every significant M&A principal, lawyer, and investment banker. These include Saul Steinberg, Ronald Perelman, Carl Icahn, Henry Kravis, Sanford Weill, Sumner Redstone, Joseph Flom, Martin Lipton, Robert Greenhill, Bruce Wasserstein, Felix Rohatyn, and many, many others.

On one deal, Kekst may be on the same side of the table as one or more of these players; on the next, on the opposite side. (Example: Although Kekst and Company and law firm Skadden Arps have worked on deals together for more than 25 years, and Gershon Kekst's relationship with Joe Flom, senior partner at Skadden, is a close one, Kekst's firm was on AlliedSignal's team during its recent hostile attempt to buy AMP while Flom's provided legal advice to AMP.)

As usual, recent statistics from Corporate Control Alert (for 1997 and for the first half of 1998) rank Kekst and Company first in terms of involvement in the largest number of acquisition transactions. Nevertheless, the firm does not wish to be viewed as specializing in takeovers. It prefers to emphasize its service in a broader range of communications matters, including IPOs, crisis management, and strategic issues (see box on page 23).

Still, if you asked 10 financial sophisticates over the age of forty to react to the word "Kekst," 10 out of 10 would instantly respond: "Takeover PR."

Gershon Kekst wanted to be the next Edward R. Murrow. Toward that end, he was briefly a broadcaster and a journalist. After recognizing that his Murrow goal was a pipedream, Kekst went into public relations. He joined Ruder & Finn in 1959 and left to found Kekst and Company in 1970.

The firm has been hugely successful. In its current annual "Agency Report Card" issue (Fall 1998), Inside PR magazine has this to say: "Probably the most profitable firm, pound for pound...with a low profile and a stellar reputation"; "the best" in the takeover area; "the best strategic resource for financial communications"; "the firm's experience and expertise in handling urgent and complex business problems is unparalleled..."; and "the average IQ is higher here than anywhere else in the industry. Thinkers and problem-solvers who speak the language of management." At the same time, however, Inside PR does not even mention Kekst and Company in its agency rankings for categories like "business to business marketing," "consumer marketing," "most creative," and "best work environment."

Kekst and Company emphasizes, with understandable pride, that most of its partners have been with it for many years: Lawrence Rand, James Fingeroth, and Jeffrey Taufield (28 years); Robert Siegfried (27); Thomas Daly (21); Fredric Spar (18); and David Kronfeld, Lissa Perlman, Roanne Kulakoff, Thomas Davies, Roy Winnick, Ruth Pachman, and Dawn Dover (between 10 and 15). Longevity like this with one firm is considered unusual in the PR business.

Despite (or more likely because of) its success, Kekst and Company - and Gershon Kekst personally - have detractors. Belittled are Kekst's methods and the value thereby provided to clients. Published criticisms of Kekst are, however, often cloaked in anonymity; in contrast, those offering praise are generally identified by name. For example, Kekst's former employer William Ruder, quoted in Across the Board (February 1998), describes him as "a superb logician [who] quickly grasps business issues. He may appear a little too blunt for some, but his reputation has been earned fully on performance."

A March 1996 Institutional Investor profile written by Suzanna Andrews paints a broader picture of how Kekst and his firm are perceived. Positive assessments: (a) "He occupies a unique position in this country. I don't think anyone has the relationships he does with CEOs and investment bankers" (Martin Lipton of Wachtell Lipton); (b) "He has extraordinarily good judgment - about people and about business trade-offs" (J. Tomilson Hill III, investment banker); (c) He is "extraordinarily at peace with himself, very spiritual. His ego and his ambition don't get in the way when he gives advice" (Felix Rohatyn).

Negative characterizations of Kekst in this same piece are, without exception, not fully attributed ("a competitor"; "one top M&A banker"; "a man who knows Kekst well"). Writer Andrews' own statements about Kekst in her article are a different matter. On the one hand, she describes him as "a consummate artist and the undisputed king" and "a trusted power broker and confidant to a galaxy of corporate chieftains." On the other, she says that "There are those who scoff that Kekst has made millions off a cheap commodity: common sense. But if that's all he's brought to the table, why haven't more people done it?"

Why haven't they indeed? Even suggesting that common sense is "a cheap commodity" defies common sense. Most inventions could be called "common sense" - except that nobody, before the inventor himself, was able successfully to create or commercialize the item. And, were business common sense a "cheap commodity," we would not see disastrous deals like Quaker Oats' purchase of Snapple and AT&T's acquisition of NCR.

Were it easy to have and apply good judgment, all investment bankers, lawyers, politicians, Presidents of the United States, CEOs, and Nobel Prize-winning partners of Long Term Capital Management would be heroes. They are not. Nor is any writer Hemingway except Hemingway himself - despite his seemingly"simple" and easily replicable style. (If you think you too can write The Sun Also Rises, try it.)

With Joe Flom's help, Gershon Kekst concluded years ago what business he was in. It wasn't the public relations business. Or the publicity business. Or the takeover business. It was the saykhl business.

Saykhl is Yiddish for "native good sense, common sense, judgment" (Leo Rosten) or "wisdom, understanding, wit, discernment; common sense" (Samuel Rosenbaum). Kekst believes that this is what his firm possesses; he believes that this is what his firm provides to clients; and he believes that this is what they pay for.

Kekst's business plan centers around "global cross-cultural advocacy" In implementing that plan, Gershon Kekst will undoubtedly seek to continue to demonstrate that he is in - and is a master of- the saykhl business.

- Hoffer Kaback

The role of the PR firm

Gershon, in a hostile takeover, what is the appropriate role for the public relations firm?

I don't think that there is any difference between the role of a public relations firm in a hostile takeover or in any other complex situation. It is to help the board of directors and the management of a company understand what it is they need to do to win the understanding and the support - and the respect, if you will - of their various constituents as they attempt to accomplish a specific task.

In a hostile takeover or the defense against a hostile takeover, the company- the client - needs to do the communications for itself. It's not for the public relations firm, in my opinion, to do the communicating. It's for the public relations firm to do the guiding and the advising and the intelligence gathering, and sometimes the training and education of the management so that it's effective in its communication, and sometimes in the preparation of the materials that support the communications.

But it's all in the strategic planning and in the tactical planning - not in the tactical execution.

Yet PR firms do tend to play a large part in drafting fight letters, for example.

They do?

Do they not?

They do not. My experience goes back a lot of years now, unfortunately. The fight letters are, more than anything else, the product of a collaborative effort between a lawyer, a banker, and a public relations person. The public relations person typically does not drive the letter. I wish it were otherwise.

In the old days, when I used to work with Marty Lipton or Joe Flom or Arthur Fleischer [Ed. Note: each a top M&A lawyer at Wachtell Lipton, Skadden Arps, and Fried Frank, respectively] all the time, I used to love the idea of getting to them to talk about a fight letter before they would get to me. I would really be very competitive about it and would get to them early in the process. There was no question we need a fight letter or a standstill letter or whatever kind of a letter we need to have, and they would accept that. I could spend all the time I wanted drafting the letter. They didn't care. But they knew and I knew that all I could do was draft the letter. The magic of the lawyer had to be exercised. It was not a matter of law. It was a matter of judgment. It was a matter of experience. It was a matter of taste. It was a matter of a whole lot of factors - that may have been totally different than any perspectives on those factors that I may have had - that would cause them to sit down and redraft the letter or throw it away and write a whole new letter which they would always give me an opportunity to then jigger around with as well. So it really was always a collaborative letter-writing process. And it still...

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