A3 Agency Shuts Down After Selling Digital Division to Gersh + M&A Learnings

February 16, 2024 by  Chris Erwin

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss the shutdown of A3 Artist Agency after selling its digital and alternative divisions to Gersh, why an M&A process wasn’t run for the combined agency business, and other key questions the industry should be asking.



A3 Agency Shuts Down After Selling Digital Division to Gersh


A3 just shut down after selling its digital and alternative divisions to Gersh.

Yet another cautionary tale for sell-side M&A.

Which led to value loss for investors, owners, and also adversely impacted 100+ staffers and their talent clients.

Here’s the story and some questions the industry should be asking…

A3 sold off its digital and alternative divisions to Gersh back in January. That deal included 25 agents and 45 staffers. But remaining at A3 after the sale were 7 other divisions and 100+ team members.

(I wrote a separate blog post about the sale here)

It was likely that the digital and alternative divisions were the highest growth and would command the most value in a sale, but that didn’t mean the other divisions didn’t have value.

In a rapidly consolidating talent representation landscape where many players have PE backing, 7 divisions across talent / literary / film finance / commercial / endorsements / theater would have been attractive to a slew of other agencies who seek more scale.

So some key questions arise…

Why wasn’t all of A3 packaged up for a combined sale? What analysis informed that a sale of the parts was better than a sale of the whole? Who was advising on the sale?

If a sale of the parts was determined to create the most value for stakeholders, then why wasn’t a sales process concurrently run for the non digital and alt A3 assets? Getting something is better than nothing, and those divisions had at least some value.

Also, selling off the digital and alt divisions without a new home nor strategy plan for the rest of A3 would destroy future A3 viability. As we’re seeing now, headlines caused panic, staffers started interviewing elsewhere, and the company went into a death spiral, minimizing the chance for a future sale or financing of a newco for the remaining A3 divisions.

It’s reported that the shut-down was a unilateral move by chairman Adam Bold, who has control of the firm. So I’m not sure what he was thinking.

What could have caused him to seek what seems to be a value-destroying plan VS the alternatives I raised above? What angle am I missing?

I know some insiders believe A3 leadership spent way too aggressively after the 2018 takeover of Abrams – staffed up quickly with heavy ranks, pricey office space, etc.

Because A3 wanted to be a player in Hollywood, and hoped that the investment would lead to more market share and revenue growth. But it seems revenue scale never caught up to their cost structure, so revenue / headcount and margins were low.

Which meant that the rest of A3 wasn’t attractive to anybody?

I’m dubious about that latter point, since a new owner could have streamlined operations to rightsize the business. But I don’t know the financial details.

Of note, the 2 other leaders Brian Cho and Robert Atterman had scrambled to block the Gersh deal by filing a lawsuit with strong personal accusations against Bold. Now Cho and Atterman are scrambling to preserve the remaining A3 divisions.

But Cho and Atterman previously gave up any control rights in the firm in a previous deal with Bold, so there’s little they can do. A cautious tale for leaders who seek to liquidate part of their equity ownership in peer leader dealmaking, and what they might have to give up to do so.

Reminds me of Jezebel’s shut-down in 2023 (which I also covered in our blog), where the M&A sales process was mismanaged by leadership and led to a shut down and tons of bad press. And then after, a new buyer cohort emerged, and Paste magazine ended up buying the remaining assets at a steep discount.

That mismanaged M&A process was also easily avoidable.

So maybe an acquirer for A3 will emerge. But A3’s agents are already interviewing all around town with other agencies, or exploring setting up their own shops. As a services business where the key assets are the agents and their talent client relationships, I’m dubious about any future sale or setup of a newco.

An unfortunate ending for a Hollywood agency that originally setup shop in 1977.



I’m the founder of RockWater Industries. We do financial and strategy advisory for media, tech, and commerce. From M&A and fundraising to consumer research and go-to-market planning.

DM me on LinkedIn or email me chris @ wearerockwater dot com

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