Talk to the most of the people who own their own public relations firms and you will find them fiercely independent, often boasting that their independent status provides advantages including higher levels of client service and greater flexibility in staffing. But talk to people who have sold their public relations firms to holding companies or other PR firms and you’ll find a surprising lack of sellers’ remorse—according to a new study by StevensGouldPartners, a firm that specializes in facilitating mergers and acquisitions in the PR industry.
One hundred per cent of the 30 former owners of public relations firms surveyed said if they had it to do over again they would sell their firms. And 69 percent of the 25 PR firm buyers interviewed said their acquisition experience was generally positive.
According to Art Stevens and Rick Gould, managing partners of SGP, the survey results—presented at the Counselors Academy meeting in Phoenix last week—shattered many myths about alleged disappointment of failed acquisitions and poor results during the past seven years.
“Buyers and sellers had considerably more positive and fruitful experiences than any of us in the PR industry would have imagined,” says StevensGould partner Art Stevens, who sold his own firm, LobsenzStevens, to Publicis Dialog. “The survey reinforces the pragmatic benefits PR agency acquisitions bring to both buyers and sellers.”
The survey reported that 84 percent of the sellers had their financial expectations met; 78 percent were satisfied with the amount of money derived from the sale of their firms; and 95 percent feel they got as much for their businesses as they could have. And 90 percent said they sold their firm at the right time: even those who sold after 9/11, the dot.com shakeout and the recent economic downturn.
As for buyers, which ranged in size from giant holding companies to mid-sized public relations firms, the survey makes it clear that few are disillusioned or disheartened about the strategic decisions to make acquisitions, according to the SGP survey.
More than half (58 percent) said their financial expectations were generally met as a result of acquisitions; 75 percent said the transition from independent firm to an acquired unit was generally a smooth one; and 70 percent said in hindsight they did not regret having made PR agency acquisitions. In fact, 100 percent of the buyers said that their clients reacted favorably to the acquisitions they made.
“The one and only major disagreement between buyers and sellers had to do with marketing and new business support,” Gould said. “On this subject buyers and sellers seem to be reading from a different page. One hundred per cent of the buyers surveyed said they gave acquisitions the marketing/new business support they anticipated. On the other hand, 74 percent of the sellers said they didn’t get the marketing/new business support they anticipated.”
Both buyers and sellers were ambivalent on the subject of what it was like for a seller to suddenly have bosses. Fifty-eight per cent of the sellers said it was personally difficult to have a boss while half the buyers felt that it wasn’t a problem and the other half felt it was.
Among buyers 62 percent have not changed revenue/profit criteria for acquisitions and 62 percent now pay more attention to second line management. Among sellers 53 percent said that the transition from independent agency to acquired unit was not smooth, but 95 percent felt truly wanted during the courting stage.