ANALYSIS <b>The Agency Business:</b> Sensitivity, communication key when integrating agencies

For M&As to be successful, both firms should pay special attention to the needs and questions of clients and employees to ensure that the overall integration transpires smoothly. As the economy heats up, we will no doubt witness more agency M&As in the PR business. When two distinct entities come together, it is always done with a bit of trepidation. And with good reason - many fail.

For M&As to be successful, both firms should pay special attention to the needs and questions of clients and employees to ensure that the overall integration transpires smoothly. As the economy heats up, we will no doubt witness more agency M&As in the PR business. When two distinct entities come together, it is always done with a bit of trepidation. And with good reason - many fail.

PRWeek spoke with two people involved in one 2002 M&A to see how it has worked and what was learned. The integration seemingly went off without too many problems because of a main lesson: Do your due diligence not just on the numbers, but on cultures, clients, and people. In other words, plan ahead. In October 2002, Edelman acquired The Headline Group, an independent agency in Atlanta with 23 employees. At the time, Edelman had only eight employees in its Atlanta office (four of the 31 total were support staff). Edelman strives to be among the top five agencies in each market, which wasn't the case in Atlanta. That was its main reason for the acquisition. Headline also had its reasons to seek out a suitor: It was on the radar screen in the Southeast, but wanted to get to the next level. Founder Claudia Patton says the previous spring, the firm created a list of things it needed for its development, including geographic reach, specialists in certain areas, senior counsel, thought leadership, and the ability to do research. Edelman fit the bill. Though the combined firm was branded Edelman from day one, the Edelman staffers moved into Headline's bigger midtown office. Matthew Harrington, president of Edelman's Eastern Region, admits that having the acquiring group move into the acquired group's space, bringing its name with it, required sensitivity. "We gave them an opportunity to present and be at the forefront to talk about their work because they could tell the Edelman story," Patton says. The firm engaged in other activities to assure employees and clients. "There was a lot of education that went on," Harrington says. "On day one, we had initial introductions to the staff about Edelman Atlanta resources. Then we went out with Claudia and the senior team to meet with every key client in the Atlanta metropolitan area." Patton says an agency's attitude in this situation should be the same one of transparency that it encourages for clients. "This is the time trust can either be cemented or destroyed. Just be very specific and honest with your clients and employees. A lot of that is done ahead of time on both sides of the firm. You can't create that in a day or two." Patton, who became GM of Edelman's Atlanta outpost, says the biggest anxiety on the staff's part, though largely unarticulated, was the fear of the unknown. From her people, it was worry that she would leave. From the original Edelman staff, it was, she says, "'Who are these people? Why are we going to them? We have 38 offices worldwide.'" Harrington says that in order to be clear on your mission you must anticipate a lot of the questions from staff and have a strong handle on the rationale for the combination. A few weeks after the October 1 acquisition, the agency held a trade-show-like event in which each room in the office featured a different Edelman practice area. Over a three-month period, practice leaders came to speak to Atlanta employees. The firm also encouraged exchanges between offices. Then there were the clients. "For Headline clients, the key message was that Edelman is a PR-centric firm," Patton says. "You'll have additional benefits, opportunities, and offerings. We're not going to jab you with fees. It's not owned by an ad agency. We're not forcing these other areas on you." Patton says neither firm had to drop any clients due to the acquisition. Far from having client conflicts, Harrington notes, there were some synergies. For example, Edelman's financial team was working with a Delaware bank, Wilmington Trust, that had recently acquired an Atlanta-based asset manager, Balentine & Company, that was a Headline client. (Maybe the secret to a successful merger is just dumb luck). Yet Harrington says the main frustration for the former Headline staff was having to do a larger check on client conflicts because Edelman has so many more. That's a problem we all should have. Both Patton and Harrington view the marriage as a success. The original 31 employees have expanded to about 40. And Harrington feels Edelman is now among the top five firms in Atlanta. Keys to successful integration From the experience of Edelman and The Headline Group, a number of pointers for a successful integration of two agencies:
  • Treat the merger as you would when handling merger communications for a client. Communication is key.
  • Explain to staff the reasons for the merger.
  • Explain each side's business, its weaknesses and strengths, to the employees of the other side.
  • Assure clients that the new situation will change their services for the better.

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