WASHINGTON, D.C.—Public affairs and strategic communications firm APCO Worldwide is looking for a backer to help it buy itself out of the Grey Global Group, which holds a 70 percent stake. APCO has been part of Grey, operating alongside sister public relations agency GCI Group, since it was acquired from the Arnold & Porter law firm in 1991.
Grey has retained Bear Stearns to assist in identifying qualified investors for APCO and says it will proceed only if acceptable investors are identified.
Grey chief executive Ed Meier and APCO chairman and CEO Margery Kraus are positioning the divestiture as the best way forward for both organizations. In a joint statement, the two said that “while over the past twelve years Grey and APCO have achieved significant growth and value together, both Grey and APCO believe now is the time to allow APCO to explore new relationships and strategic sources of investment to continue to innovate and to grow outside of the traditional public relations model.”
APCO would prefer to find a partner “who believes in the direction we are taking and wants to invest in our strategic approach,” says Kraus. An ideal partner could be a management consulting firm or a private equity firm—particularly one that would allow APCO to expand employee ownership among and perhaps beyond its senior executives—rather than another advertising conglomerate. But Meier says he will consider offers from anyone who has the requisite resources.
Meier says the decision to divest “is consistent with Grey’s often-stated strategy of having only one global business unit in each communications discipline.” He says the company considered consolidating APCO with GCI, but “you don’t mush companies together that have their own successful cultures and their own successful management.”
Keeping them apart, however, seemed to hinder the growth of GCI in particular. The firm has not had its own branded presence in Washington, D.C., relying instead on APCO’s presence there. Expansion into the D.C. public affairs market is likely to be a priority for GCI, he says, although it is too early to say whether the expansion would come via acquisition.
APCO, best known for its public affairs work, has significantly broadened its service offering to the leadership of corporations, institutions and governments to include corporate reputation, mergers and acquisitions, crisis and litigation communications, marketing and on-line communications, and quantitative and qualitative research among other services. Some of those services now overlap with GCI offering “in some significant ways,” according to Kraus and Meier.
According to the statement, “Grey has played a very important role in helping APCO achieve its status as a distinguished, global firm with exceptional senior client counselors. APCO’s future is bright in large part because of Grey’s historical and consistent commitment.”
Kraus says APCO will maintain “a close relationship with Grey to continue to realize certain practice-related and client synergies.”