FTI Consulting: PRWeek Global Agency Business Report 2016

Global revenue for FTI Consulting's strategic communications unit was flat year on year.

Edward Reilly, global CEO, strategic comms, FTI Consulting
Edward Reilly, global CEO, strategic comms, FTI Consulting

Principals: Ed Reilly, global CEO, strategic comms; Steve Gunby, CEO & president, FTI Consulting; John Waples, UK head
Ownership: Independent
Offices: Global 34 (offices with a strategic comms practice); US 14; UK 1
Revenue: Global $189.97m; US $76m; UK £32.5m (estimate)
Headcount: Global 599; UK 170 (estimate)

U.S.

Global revenue for FTI Consulting’s strategic communications unit was flat year on year. The company would not break out performance by region, office, or segment for its strategic comms business.

"When you look at the business, the combination of our offerings — our corporate repositioning, financial communications, increasing presence in Washington and Brussels in public affairs — has created an offering more relevant to clients," says Ed Reilly, global CEO of the strategic communications segment at FTI.

The firm is tight-lipped about specific client wins and losses, but noted it helped generic drugmaker Perrigo fight off an unsolicited takeover bid by pharmaceutical company Mylan late last year. FTI also worked with Shire on its $32 billion deal for Baxalta, which the two companies agreed to early this year.

Reilly adds that the firm’s U.S. business was strong in energy and natural resources, as well as helping clients resolve cross­border issues. It also boosted public affairs in the U.S. and E.U. in the past 36 to 48 months. The firm worked on 188 mergers and acquisitions in 2015, down slightly from 190 in 2014, according to a report by Mergermarket. FTI ranks second on Mergermarket’s list in terms of the number of deals worked on in Europe and the U.K.

Corporate comms support
The firm also supported embattled healthcare device-maker Theranos last fall as it pushed back against scathing Wall Street Journal reports. It contended the newspaper’s journalists inaccurately represented Theranos’ testing methodologies. FTI was also brought on by global asset management firm Henderson Global Investors for financial and corporate communications support.

For the United Nations Climate Change Conference in Paris that concluded last December, FTI launched its own conference website with contributions from team members, as well as industry executives, NGOs, and academics.

Building materials manufacturer USG named FTI its PR agency partner early last year. Last spring former FTI executives Hugh Barker, Chris Kettmann, and Victoria Sivrais founded Clermont Partners, a boutique stakeholder relations firm with offices in New York and Chicago. Early in the year, former senior MD and corporate communications leader for the Americas Bob Knott left FTI for MWWPR. He joined Edelman later in the year.

Headcount for the division was up 6% year to year; 60% of the division’s staffers are located outside the U.S.

"Last year, we did a very good job of developing a loyal core of employees with us," says Reilly. "We don’t lose many people to competitors; we do lose some to the client side."

UK & EMEA

FTI saw global revenue rise around 7.5 per cent to $190m in the past year, and Ed Reilly, global CEO of its strategic comms arm, says: "EMEA, and particularly the UK, performed in a very, very strong way." The agency has not provided figures for these regions, however.

Meanwhile, Reilly says profitability also surged, with underlying earnings (EBITDA) up 24 per cent in 2015, the second consecutive year when growth topped 20 per cent.

He attributes the performance to three main trends: continued cross-border M&A activity; the rise in "activism", from shareholders to campaigners and governments; and the "democratisation of business information", where more and more people are looking more closely at how businesses operate. All of these, combined with the increasing high profile of CEOs and leadership teams, have meant greater demands for FTI’s services.

John Waples, senior MD and EMEA head of strategic comms, highlights how FTI’s different regional offices are continuing to work more closely together. Two of the biggest deals it worked on in the year – Monsanto’s aborted pursuit of Syngenta and pharmaceutical giant Shire’s $32bn takeover of Baxalta – involved joint work between public affairs departments in London, Washington and Brussels, plus the financial comms specialisms in New York and London.

"It was humming," says Waples. "It was a year when you felt the agency worked both on a domestic level and on an international level.

"We’ve been trying to do that for the past three years. I think 2015 was just a glimpse of some of the great things that will come."

Outside EMEA, which represents about 60 per cent of FTI’s revenue, Reilly highlights Asia-Pacific as the strongest performer with revenue growth "well over 25 per cent".

"And we’re finding that our services there are very much in demand, particularly as Asian businesses look for opportunities, look at attractive asset prices in North America, Europe, Latin America, Africa. That outbound investment has been a drive of our business."

However, outside APAC, Reilly says multinational firms are "retrenching somewhat around their core", making the emerging markets segment "a bit tougher" for FTI: "But at the core, with our significant growth in top line and our significant growth in profitability, at the core we continue to see very strong business activity, particularly in Europe and North America."

Overall, Waples says FTI’s financial services and industrials segments "had a great year", while the public affairs arm, under Alex Deane in London since 2014, has been a "great success".

Reilly says: "Our public affairs arm is increasingly important and the team that we have brought in in London has made a significant contribution. Our fastest growing office last year was our office in Brussels; we have now almost 70 people working in Brussels for us, we’re the number one practice in the market. The Brussels, London, Washington DC combination on the regulatory and public affairs side has been a very, very important part of our services this year."

The energy practice fared less well, however. Reilly says: "We have had a very good run of representing particularly US headquartered companies through the boom of shale gas. I think what has happened with commodity prices has been a big disruption that we’ve had to deal with." It has moved from a "go-go market of opportunity" over the past five years to one where a number of FTI’s clients are "going through a tough time".

He declines to say which accounts have dwindled or been lost, but Waples says: "It’s fair to say that every single big oil group is not as wealthy as it was 12 months ago."

Talking of energy, Waples lists Gareth Wynn, senior MD who leads FTI’s Energy & Natural Resources practice, as among the most significant appointments in the year. "I think that shows great promise in terms of rebooting our energy offering to try to get the same scale as we got with industrials, life sciences and financials," Waples says.

He mentions former health secretary Patricia Hewitt as another significant hire in London, while Reilly also points to Sir Philip Rowe in Brussels and Arnaud Salla, MD of strategic comms in Paris. Last year the global headcount grew 12 per cent to 599, and the aim is to grow it by 14 per cent this year.

Asked about priorities for 2016, Reilly stresses the importance of employee engagement; ensuring its senior team are aware of the latest products and services at FTI to make sure specialisms are used to their full.

For Waples, there is going to be a particular focus on the struggling energy sector: "This has been a big year for our energy team, it’s shown some real traction in the industry and if we can get some big wins under our belt that would consolidate our position in that industry."

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