NEW YORK—MDC Communications, which earlier this year acquired stakes in California-based consumer public relations firm Allison & Partners and New York corporate and financial specialist Sloane & Company, could spend up to $50 million to add more public relations firms to its portfolio over the next few months, according to chief executive Miles Nadal.
Nadal is bullish on the public relations sector in large part because of the explosion of interest in digital and social media, which present a massive opportunity for PR firms. His existing PR businesses are doing well, he says, delivering 15 to 20 percent top-line growth and similarly impressive profit margins. At the same time, he says: “PR firms are extremely entrepreneurial and have been more focused than advertising agencies on innovation and differentiation, and things that have differentiated them are things like social media expertise and branded entertainment.”
He is particularly interested in firms with expertise in areas such as healthcare, financial services, public affairs, and consumer.
The only obstacle to the planned spending spree, according to Nadal, is that “the reality is that there are not a lot of amazing firms out there.” His ideal, he says, is to find firms with the potential to become “the Crispin Porter + Bogusky of public relations,” a reference to the mould-breaking advertising agency that MDC acquired in 2007.
But Nadal is interested in more than just the bottom line of the firms in which MDC takes a stake. He cites seven rules of partnership:
1. Only partner with people you want to have breakfast, lunch or dinner with, a second time.
2. Only partner with people you like, admire and respect.
3. Only partner with people you want to spend a long weekend with, on a small boat, in a small cabin or on a small ranch.
4. Only partner with people you trust enough to make the executor of your estate.
5. Only partner with people who value your time as much as they value their own.
6. Only partner with people who have the human compassion gene. Compassionate leaders motivate and inspire their employees to reach beyond their own self imposed limitations.
7. Only partner with people who share the same passion, dedication, and willingness to sacrifice to accomplish the common mission.
He doesn’t believe in forcing “synergy” between acquisitions, either. “We don’t believe ‘mushing’ things together works. We think it destroys value. We facilitate cross-referral but we don’t mandate it,” he says. “All of our partners are entrepreneurs so they enjoy their independence, but at the same time if they see an opportunity to add value to their clients and to their own business they will do so.”
Other benefits of partnership with MDC, he says, include the fact that “we will fund 100 percent of their expansion” and “shared services that can help with everything from providing social and digital media capabilities to improving professional development to new business opportunities.”
Ultimately, Nadal says, he wants MDC to stand as a clear alternative to the giant holding companies that currently dominate the advertising and public relations business. “I want us to be the place where the best talent lives, that doesn’t disenfranchise the people and the culture that made these agencies great in the first place. I believe we can create a business with an enduring competitive advantage that is sustainable over the long-term.”