Anthony Hilton: Signs are good for a prosperous 2011

The economics of financial PR firms have a lot in common with those of the medium-sized financial houses - what we used to call mid-cap brokers.

Anthony Hilton
Anthony Hilton

Both groups profess to make a living from providing a basic service to clients. Both just about scrape by if this annuity income is all they have to live on. The fun and the money come from the one-off activities - clients seeking a stock market listing; companies seeking to raise extra capital; some kind of takeover activity, either as attacker or defender; a product launch that has the potential to change the perception of the business or, in the case of PR, some corporate disaster that requires reputation management.

Now, as both groups know, this has not been a good year. The recession and its aftermath have not been as severe as predicted, and client companies have made more money than they thought they would. But such is the level of uncertainty that they have spent the year not expecting their relative good fortune to last and that has made them reluctant to do anything out of the ordinary.

It is in times like these that firms come together out of weakness. The theory is that two businesses with relatively weak revenue streams can merge and the resultant firm can offer a wider service range off a relatively smaller cost base. But the striking thing about the past 12 months is how rarely this has happened. No-one faults the logic, but the people issues involved and the difficulty in agreement on the value of the businesses have proved too challenging.

Now the moment seems to have passed. As this year draws to a close, there is considerable optimism about next year, much more so than at the equivalent stage 12 months ago. More people believe the economy is on the mend, there are signs of a greater appetite for bids and deals and most firms claim they have a pipeline of stuff that should make next spring quite busy, provided nothing happens globally to undermine confidence.

No-one is suggesting we are going to get back to the levels of 2007 any time soon, and no more should we.

But there is enough around for those who have survived thus far to feel they have got through the worst.

Anthony Hilton is City commentator on London's Evening Standard

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