ANALYSIS - Profile - Powell: new power behind Shandwick DC - Shandwick’s purchase of Powell Tate has thrust Jody Powell into the driver’s seat at Shandwick PA. Can he bring disparate companies together and expand the practice at the same t

A banner in the lobby of Powell Tate’s DC office boasts: ’The most powerful city in the world has a new leader. Shandwick Washington.’ But who leads the new leader?

A banner in the lobby of Powell Tate’s DC office boasts: ’The most powerful city in the world has a new leader. Shandwick Washington.’ But who leads the new leader?

A banner in the lobby of Powell Tate’s DC office boasts: ’The most

powerful city in the world has a new leader. Shandwick Washington.’ But

who leads the new leader?



When Shandwick bought the Cassidy Companies last month in a deal

reportedly worth dollars 70 to dollars 80 million, a slate of newcomers

were boosted into top positions within the acquiring company’s DC

office.



One of the biggest winners is Jody Powell, the new CEO and chairman of

Shandwick Public Affairs (SPA). He and new SPA vice-chair Sheila Tate,

his cohort from Powell Tate, and David Krawitz, who was and will remain

president of SPA, are striving to meld two corporate cultures into one

winning PR firm.



Powell, a former press secretary to President Jimmy Carter, brings

heavyweight Beltway gravitas to the party. And Powell Tate is chock full

of senior public affairs pros. Its reception area has the potted plants

and traditional furniture one would expect to find in a law firm

Shandwick is a younger firm by Washington standards, and aggressive,

with new offices that could be described as LA-ish. (Nothing’s settled,

but Shandwick may be departing its new digs for the building in which PT

is housed.) Its fee income grew 50% last year, while income at the more

traditional PT stood still (see Washington report, p26).



The mastermind behind the growth of Shandwick’s public affairs practice

is Michael Petruzzello, the DC-based CEO of Shandwick US. Petruzzello is

a New Yorker, while Powell hails from a small town in Georgia. It’s yet

another demonstration of a potential clash of cultures.



Powell came to DC almost 23 years ago to serve as Jimmy Carter’s press

secretary. He still has a Southern drawl and an irreverent style,

despite spending over two decades in Washington among the city’s movers

and shakers.



One DC pro familiar with both firms suggests Petruzzello can gain a

great deal from Powell’s presence: ’Petruzzello’s a young guy working

his way up in PR. He may want to do all he can to inherit whatever Jody

Powell chooses to give away.’



Shandwick’s link with lobbyist-businessman Gerald Cassidy and Powell

serves both companies’ needs. Cassidy had built a mega-government

affairs operation: his own lobbying firm with Democratic ties

complimented by a similar Republican-leaning firm, and also the public

opinion research firm of Frederick Schneiders, the litigation

communications firm of Bork & Associates, and Powell Tate.



Powell says Cassidy expressed interest in going public in 1998, but the

initial IPO interest died down due to shaky financial markets. The

company replaced its original investment house with Donaldson, Lufkin

and Jenrette, which is credited with brokering the match.



Powell will not talk specifics about the deal, but what is interesting

is that Cassidy’s initial IPO was for dollars 40 million, and the price

tag of the deal is reportedly double that. Clearly, Shandwick wanted

this deal badly.



The mechanics are thus: Powell Tate merges into SPA, while the other

Cassidy firms continue operating under their own names, but under the

Shandwick umbrella. Cassidy becomes chairman and CEO of Shandwick’s DC

operations. Shandwick Washington should become the biggest player in the

market, jumping ahead of perennial leaders Burson-Marsteller and Hill &

Knowlton.



One head of a local PR firm commented that Shandwick’s deal has ’created

a forceful presence in the marketplace in Washington. The question is

how will that change Shandwick as a company and who do they want to

become?’



In Powell’s view, the companies have more in common than what

superficial impressions suggest. He says his immediate goal is to ’bring

these two organizations (SPA and PT) together successfully’ which, when

combined, represent approximately 160 employees and an estimated dollars

25 to dollars 30 million in fee income. When you factor in the rest of

the Cassidy companies, and the non-public affairs part of Shandwick’s DC

office, the figure rises to dollars 75 million.



Coming into the Shandwick network is a plus, says Powell, because he

knows all too well the cyclical nature of the public affairs

business.



The first nine months of 1998 were prosperous, but things slowed down

once Washington focused on the impeachment. PRWeek figures show Powell

Tate registered flat growth in 1998 - up 1% to dollars 15.7 million - at

a time when other big DC firms with more diversified practices were

posting double-digit income gains.



Petruzzello contends that public affairs is a key component of his

expansion plan - not just in the US, but in cities such as London and

Tokyo. And he says that Powell ’will be helping lead our public affairs

practice worldwide.’



But first there is the merging of the firms to complete. Although Powell

says that the big play offers strong potential, he admits it will take

work. ’It’s really a coming together of equals,’ he insists, allowing

that it could very well make it a bit harder to merge practices of

approximately equal size and reputation.



In such acquisitions, Powell says there is usually a loss of revenue, at

least in the first year. ’That’s understandable. You have to spend a lot

of time doing things other than business,’ he admits, adding that a

struggle to maintain and replace key talent also ensues.



’In some cases,’ Powell says, ’you have situations in which the

companies never regain their standing. It’s important that we get this

right.’ The staffs will be consulted on what they consider to be their

companies’ strengths and what principles should guide the blending of

distinct corporate cultures.



Naturally, there is the uncertainty that occurs in such mergers. A story

circulating around PR circles is that at one meeting between the two

staffs, Powell read an anonymous comment made by a Shandwick employee

wondering whether they would receive the more generous Powell Tate

salaries. Then he read one from a Powell Tate employee that credited

Shandwick salaries with being larger and wondering whether they would be

matched. Powell then tossed the papers in the air, to the amusement of

those present.



Now, it’s up to Powell to put the pieces together so that bigger truly

is better.





Jody Powell



Chairman and CEO



Shandwick Public Affairs





1970-81 - Press secretary for Jimmy Carter



1982 - Political columnist and analyst 1987 Chairman and CEO



Powell Adams & Rinehart



1991 - Chairman and CEO/Powell Tate



1999 - Chairman and CEO of Shandwick Public Affairs.



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