The Big Question: Do you think it is ever a good idea to buy shares in a PR company?

Text 100 Group, the technology PR business that has been quoted on OFEX since 1997, has announced that it is to seek a full listing on the London Stock Exchange next month

Text 100 Group, the technology PR business that has been quoted on

OFEX since 1997, has announced that it is to seek a full listing on the

London Stock Exchange next month





CRAIG WALTON FRAMLINGTON GROUP



Investing in small companies is about identifying growth, growth and

growth - then making sure that you don’t pay too much for them

Investing in a PR company is no different from investing in any other

service-based small company. Crucially important is an assessment of the

management and the quality of the business plan and strategy, since much

of the promise of the company will be tied up in prospective earnings.

Nowhere will this be more important than in a people business such as

PR. Equally important of course would be the quality of the client

list.





ADELE BISS AS BISS



Yes, with certain provisos. One looks to see if the company is well

managed and that it has growth potential. There is a greater risk if a

company relies on a small client base. If a company is exposed to any

body blows, such as losing a key client or key members of staff then the

company’s share price is very vulnerable.



I have had personal experience of investing in my own PR company and

feel that it is essential to have an interest in your own team, making

sure that a very strong company is being formed.



Shareholders have to evaluate the companies they are investing in

carefully and are therefore on the lookout for signs that a company is

well managed and not over dependant on external events.





LORNA TILBIAN WEST LB PANMURE GORDON



Yes, if it has good management. PR is an attractive industry to invest

in. But companies, once quoted, can have problems. For example, Good

Relations, the first PR company to float, had one of the directors

selling her share of the company. Conversely, Paragon’s listing proved a

success, as did Chime’s. Investors, however, always look at the

downside, and the PR industry is notoriously fickle. It can be a great

industry to have exposure to, but experience in some instances has

proved disastrous.





KIRSTY MACMASTER MACMASTER AND COMPANY



No, unless management keeps shareholder value in mind. Where PR firms

have failed is in their business practice and financial management. The

PR industry is traditionally not a successful sector to invest in due to

a history of short-term stays. However, if it can prove its growth

potential, then it can succeed. PR has a wide body of clients and reaps

high earnings, but is not presently able to make much money. Whereas ad

companies have upgraded their policies and their understanding of what

public companies should do, PR firms have not. PR agencies are as

capable as anyone else of creating wealth, but it’s down to their

management.



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