It’s probably fair to say that when Cleveland-based Dix & Eaton announced earlier this year that it was launching a mergers and acquisitions specialty, the news failed to rattle the foundations on which New York’s M&A specialists—firms like Kekst & Company, Joele Frank Wilkinson Brimmer Katcher, Sard Verbinnen, Abernathy MacGregor—were built.
Even Dix & Eaton’s chairman and CEO Scott Chaikin concedes that the firm doesn’t expect to take a lot of big budget transaction work away from the New York specialists, but that’s not the point. The move was designed to demonstrate the firm’s capability when it comes to delivering the kind of high value, high margin strategic communications services that help client CEOs sleep better at night.
“I want us to be the go-to agency for senior management,” says Chaikin, who understands that PR firms are not automatically awarded that kind of access, and follows a game plan designed to earn it. “I’m interested in developing long-term relationships with our clients. If we can prove ourselves valuable to our clients over time, we can develop the level of trust and confidence that is necessary if our clients are going to turn to us when the stakes are high.”
So Dix & Eaton goes into every new client relationship planning for the long term, measuring the quality and the value of each relationship. “Longevity is a factor,” says Chaikin. “But a quality relationship is one where we feel like we have the right relationships with the right people. And where if something important happens they call us.”
In recent months, American Greetings called D&E when it was acquiring competitor Gibson and later when it was hit with a patent infringement suit—later dropped—by Hallmark; the CEOs of both Geon and M.A. Hanna called when the two companies were coming together in a multi-billion dollar deal to create the world’s largest polymer services company; and Roadway called when the Oscar statues it had been carrying disappeared. The firm also coached one client through the dismissal of a CEO and another through a Chapter 11 filing
The firm’s client roster includes 17 of northeast Ohio’s 35 largest public companies, as well as the region’s largest accounting firm, hospital network, grant-making foundation (the nation’s first community foundation, and its second largest), its two largest law firms, four of its five largest colleges, its two leading performing arts organizations, the state’s largest daily newspaper, and a professional sports franchise.
Dix & Eaton is one of a rare breed, a genuinely full-service regional PR firms with expertise in both PR (including marketing and corporate communications, media relations and crisis management) and IR (including mergers and acquisitions, proxy fights, and Chapter 11 filings).
“In terms of senior management relationships, we have CEO nexus with 25 of our 33 ongoing public company clients, 15 of our 17 privately owned clients, two of our four professional service clients, and all seven of our institutional clients,” Chaikin says.
Dix & Eaton has been extraordinarily successful when it comes to forging the kind of relationships that turn a public relations firm into a strategic partner rather than simply a supplier. It has established itself on a regional level as the kind of firm Kekst or Abernathy is on a national level—a positioning many midsize agencies would die for. Chaikin believes the secret to that success lies in several factors.
First is the firm’s history. According to Chaikin, Dix & Eaton founder Henry Eaton, who retired in 1999, “was a student of CEOs and what they wanted from a PR firm. He was involved in a lot of transactions and he knew how to earn the confidence of the CEO and what to say once he had it. There was a time when Henry was the only person here who knew how to do that. We really began to take off as a firm when Henry taught the rest of us.
“He was very good about giving everyone else air time with the CEO—me in particular. Now there are a handful of people here who are comfortable sitting down with the CEO and helping him solve his problems.”
Eaton now sits on the firm’s board, a group that includes two insiders—Chaikin and president Keith Mabee—and outsiders such as David Hoag, former CEO of The LTV Corporation; James Bennett, CEO of Employon and a former managing director at McKinsey & Company; James Boland, CEO of the Cavs/Gund Arena Company and a former vice chairman at Ernst & Young; and Richard Pogue, former managing partner of law firm Jones Day Reavis & Pogue.
It is unusual for a privately held PR firm to pull together such an illustrious array of outsiders, but the board helps Dix & Eaton keep its finger on the business pulse of the region, and provides insight into the kind of counsel CEOs are seeking from their external advisors.
The second factor is the firm’s account staff, which is unusually top heavy. More than 80 percent of Dix & Eaton’s professionals have more than 10 years experience. More than 40 percent have more than 20 years—most of them having divided that time between agency and corporate work, sometimes in PR and sometimes in other areas of management.
“If we are going to compete with management consultants, we have to recruit the same way management consultants do,” Chaikin says. That means making non-traditional hires. The firm has added two attorneys in the past couple of years, as well as a certified financial analyst and former Institutional Investor All-Star. It has nine MBAs among its 55 professional staff—among the highest ratios in the industry and more than many firms ten times D&E’s size.
“It’s a lot easier to teach someone who is a bright and intellectually resourceful person to do PR than it is to teach someone who knows the industry how to think the way we want them to think,” Chaikin says. “We look for people who like to figure things out, who like solving problems, regardless of where they might have worked before.”
Attracting people is half of the equation; but holding on to them is just as important. At the end of 1999, Eaton completed the sale of his firm to employees, with two-thirds of them purchasing stock in a buy-out that made D&E the nation’s largest employee-owned PR/IR firm. Ownership breeds loyalty. The firm’s employee turnover was just 7 percent last year, Chaikin says—and it’s probably no coincidence that the agency also managed to hold on to 96 percent of its clients.
“My main commitment to our people is that this is going to be an interesting place to work,” says Chaikin. “The challenge is to make this the kind of place where people can realize their career aspirations without leaving. That means the work has to be constantly challenging, and it has to give them a chance to make an impact.”
The third factor is the firm’s target market. Cleveland is a deceptive market, Chaikin says. As a media market, it ranks just 15th, but it’s in the top half-dozen in terms of the number of Fortune 500 headquarters it hosts. “We have banks here, and top tier accounting firms. There’s a professional services environment, so executives are used to getting counsel here rather than having to go to New York or Chicago.”
That gives D&E access to some of the largest manufacturing and professional service clients in the country, companies that are not be household names and don’t feel the need to pay New York prices to get the kind of service they expect. So when two D&E clients, Geon and Hanna, came together last year to create the world’s largest polymer firm, Chaikin counseled both CEOs. “That’s not going to happen in a merger like AOL-Time Warner,” he says. “It’s easier to get that kind of involvement at middle market companies.”
So far, location has not been an obstacle in terms of building a national portfolio of clients.
“I don’t know how far we can extend it in terms of geography,” Chaikin says. “But last year we worked on a proxy fight in Indiana and a regulatory battle in Arizona. Most of our Internet clients come from outside the region. On the other hand, we have a unique position in Cleveland, because of our reputation in the market, that would take a huge investment of time and money to replicate elsewhere.”
Cleveland has another advantage. “We don’t have to compete for talent the way we would in a larger market,” says Chaikin. “We don’t lose people to other PR firms.”
The fourth big factor in D&E’s success is the way the agency approaches every new client assignment. “We ask them to give us a date when we can come in for an orientation session that includes the CEO, the CFO, the heads of the various business lines,” says Chaikin. “For one thing, that gives us the best chance to get smart about their business and make ourselves valuable faster; for another, we start off knowing the right people and having them know us.”
Sometimes, he admits, the head of public relations is not interested in having the agency meet with senior management. Sometimes the CEO himself can’t make the time. When that happens, the chances are the relationship is not going to last.
It requires discipline to walk away from business—sometimes lucrative business—that doesn’t meet Chaikin’s criteria for quality and value, but D&E is prepared to do it in order to make sure its people are constantly engaged.
“The challenge is not to get to the point where 100 percent of what we do is driven by the CEO,” says Chaikin. “The challenge is to get to the point where 100 percent of our relationships are strong enough that when there is an issue the CEO cares about, he thinks of us.”