Financial League Tables 2002: The slow deal flow

Maintaining deal flow has been the biggest challenge for city PR firms in a year of scant business. Richard Carpenter reports on PRWeek's Financial League Tables

Financial League Tables 2002: The slow deal flow
Financial League Tables 2002: The slow deal flow

It has not been the best of years for the financial PR industry.

Most of the big agencies have been talking about the poorly performing stock market that has put companies off from launching bids or mergers for fear of paying more this week than they might the next. Few companies are tempted to float their shares on the stock exchange in the current environment either. They would rather bide their time and look to raise more capital if and when the market improves.

The PRWeek Financial League Tables, based on data provided by M&A information database Zephyr, includes deals completed between 1 January and 30 September, 2002.

All of the deals included in the rankings have either a UK-based bidder, vendor, or target. This point is even more important in the current environment as many larger agencies have turned their attention overseas in a bid to maintain deal flow.

Brunswick continues to lead the league table according to deal value, but its reputation as an M&A specialist means that the value of the deals it works on has been hit more than most. Last year Brunswick topped the table advising on just over £66bn worth of deals in the relevant period.

This year that number falls dramatically to £41.7bn - some 37 per cent down on 2001.

That being said, Brunswick has managed to maintain the deal flow even if many of those deals don't have quite the same value as in previous years. From January to September it advised on 91 UK-related deals, compared to 86 in the same period in 2001, bringing its average deal value down to £458m compared to £768m last year. The number of smaller deals is a result of a heavier reliance on project work from retained clients, but high-profile cases are still to be found. The agency advised Powergen during its £9.6bn acquisition by German utility E.On and P&O Princess Cruises during its £4.8bn takeover by Carnival Corporation.

The fact that Brunswick has been able to sustain such a large fall-off in deal value and still continues to lead the main table by a sizeable margin says a lot about the level of its pre-eminence in some of the mega-deals of recent years.

Its closest rival this year is Financial Dynamics - which moves up to second position having advised on deals worth £30.5bn - managing to leapfrog Citigate Dewe Rogerson on just under £30bn. FD's highest profile deals included advising Carnival Corporation during its takeover of P&O Princess Cruises and RWE's £5.2bn acquisition of Innogy Holdings. CDR was on E.On's advisory team for the Powergen takeover and worked for National Grid in its £6.5bn merger with the Lattice Group.

Once again, FD worked on more deals during the period than any other agency - 125 compared to 142 last year - giving it the second lowest average per deal of any of the agencies in the top ten, at just £244.2m. It is only beaten in this regard by College Hill, which advised on 69 deals worth a total of £4.04bn to give it a relatively low average deal value of £58m.

There is one new entrant in this year's top ten by deal value. Cubitt Consulting sneaks into the elite group having worked on £3.6bn worth of deals between January and September. The vast majority of this is a result of being on South African Breweries' advisory team for its £3.6bn acquisition of Miller Brewing. Last year, Cubitt did not even make it into the top 25 by deal value. Cubitt's rapid rise just keeps the Hogarth Partnership, on £3.2bn, out of the top ten despite its own significant climb up from 17th position in 2001.

The biggest mover within the top ten is The Maitland Consultancy - up to number four this year from eighth position in 2001 - having worked on 36 deals with a total value of £22.2bn. Its rise up the rankings also gives it the highest average deal value out of any of the agencies this time round, at £616m. The average is buoyed by advisory work for The Lattice Group in its merger with National Grid and to Kingfisher in its £3.2bn acquisition of the remainder of Castorama Dubois Investissements.

Break the deals down into their constituent parts and you find an even clearer story of the poor market conditions. The top ten agencies for IPO work accounted for just 22 deals between them in the first three quarters of the year. Last year, which had already been affected by the downturn, saw 37 IPOs during the same period. Brunswick just about scrapes home at the top of the pile with £1.02bn worth of IPOs, but the differences between the agencies are relatively minor in such a scant market.

Despite the gloomy market conditions all of the larger agencies manage to keep their upbeat PR hat on when talking about their current outlook.

As deal work tails off, so routine calendar work keeps things going and new types of projects arise as companies struggle with a changing environment.

And even if quoted companies are not doing big corporate deals the venture capitalists are out there 'bottom fishing', as one agency head puts it.

'The key difference between financial PR agencies and investment banks is that we have a retained client base that provides something of a buffer,' points out Patrick Donovan, Citigate Dewe Rogerson managing director of UK PR. 'Obviously the markets are challenging - not least of which are the uncertainties confronting the market with regard to Iraq - but these conditions also offer new opportunities, such as restructurings. There are a number of companies looking to remodel themselves.' He also points out that more companies are using rights issues - turning to existing shareholders for capital - to raise funds in the current environment.

CDR, for example, has worked on Cookson's and Legal & General's rights issues in recent months.

Financial Dynamics MD Charles Watson takes a similar line and points out that there has been intense pressure in recent months, from both regulators and investors, for companies to increase the level of information that they put out to the market. He also believes that the credibility of financial PR as independent advisors has risen as analysts have come under the spotlight for a failure to provide independent advice: 'We're in a growth industry.

The value that gets placed on the counsel we give our clients is increasing.'

So what about the chances of a turnaround any time soon? Angus Maitland, head of The Maitland Consultancy, comes as close as it gets to any sort of bullish sentiment. 'It's very difficult to predict. There's a little more activity than there was earlier in the summer but it's still pretty patchy.'

Few folk in the financial PR sector will stick their neck out in that regard.

THE TOP 25 FINANCIAL PR FIRMS 2002

Rank Adviser Number of Total deal value

deals (pounds ms)

1 Brunswick Group 91 41,680.56

2 Financial Dynamics 125 30,526.03

3 Citigate Dewe Rogerson 63 29,993.94

4 The Maitland Consultancy 36 22,208.81

5 Finsbury 45 21,991.84

6 Smithfield Financial 14 7,601.57

7 Gavin Anderson & Company 27 6,638.29

8 Tulchan Communications Group 14 4,436.71

9 College Hill Associates 69 4,035.52

10 Cubitt Consulting 3 3,623.85

11 Hogarth Partnership 21 3,199.18

12 Euro RSCG Corporate 1 3,186.90

13 Bell Pottinger Financial 29 3,057.72

14 Weber Shandwick Square Mile 75 2,824.60

15 Hudson Sandler 35 2,303.64

16 GCI Financial Group 20 1,843.76

17 Tavistock Communications 24 1,722.16

18 Buchanan Communications 95 1,319.45

19 Cardew & Co 10 1,301.75

20 Holborn Public Relations 15 490.06

21 Grandfield Communications 5 449.65

22 Beattie Media 3 351.1

23 Bankside Consultants 21 346.51

24 Haggie Financial 6 335.6

25 City Profile Group 10 317.92

TOP 25 FINANCIAL PR FIRMS BY NUMBER OF DEALS

Rank Adviser Number of Total deal value

deals (pounds ms)

1 Financial Dynamics 125 30,526.03

2 Buchanan Communications 95 1,319.45

3 Brunswick Group 91 41,680.56

4 Weber Shandwick Square Mile 75 2,824.60

5 College Hill Associates 69 4,035.52

6 Citigate Dewe Rogerson 63 29,993.94

7 Finsbury 45 21,991.84

8 The Maitland Consultancy 36 22,208.81

9 Hudson Sandler 35 2,303.64

10 Binns & Co Public Relations 34 224.35

11 Bell Pottinger Financial 29 3,057.72

12 Gavin Anderson & Company 27 6,638.29

13 Merlin Financial Communications 27 222.17

14 Tavistock Communications 24 1,722.16

15 Hogarth Partnership 21 3,199.18

16 Bankside Consultants 21 346.51

17 GCI Financial Group 20 1,843.76

18 Penrose Financial 19 125.8

19 Biddick Associates 19 89.83

20 Hansard Communications.com 16 31.9

21 Holborn Public Relations 15 490.06

22 Smithfield Financial 14 7,601.57

23 Tulchan Communications Group 14 4,436.71

24 Cardew & Co 10 1,301.75

25 City Profile Group 10 317.92

Criteria: 1 Announced or completed between 1 January-30 September 2002 2

Either bidder, target or vendor is UK-based 3 Deal types include

mergers, acquisitions, IPOs, MBOs, MBIs and IBOs

TOP 10 FINANCIAL PR FIRMS ACTING ON VC DEALS

Rank Adviser Number of Total deal value

deals (pounds ms)

1 Financial Dynamics 5 3,730.6

2 Brunswick Group 3 3,730.6

3 Gavin Anderson & Company 3 3,683

4 Tulchan Communications Group 4 3,526.6

5 Hogarth Partnership 8 1,782.89

6 Hudson Sandler 8 1,527.38

7 The Maitland Consultancy 3 1,067.7

8 Citigate Dewe Rogerson 3 982.9

9 Finsbury 2 903.2

10 GCI Financial Group 10 836.2

Criteria: 1 Announced or completed between 1 January 2002-30 September

2002 2 Either bidder, target or vendor is UK-based 3 Deal types include

mergers, acquisitions, IPOs, MBOs, MBIs, IBOs

TOP 10 FINANCIAL PR FIRMS ACTING ON IPOS

Rank Adviser Number of Total deal value

deals (pounds ms)

1 Brunswick Group 4 1,021.90

2 College Hill Associates 3 872.7

3 Finsbury 2 609.43

4 Tulchan Communications Group 1 393.13

5 Hogarth Partnership 1 340

6 Weber Shandwick Square Mile 5 139.14

7 Citigate Dewe Rogerson 2 63.2

8 Financial Dynamics 1 37

9 Merlin Financial Communications 2 14.24

10 Baron Phillips Associates 1 13.3

Criteria: 1 Announced or completed between 1 January-30 September 2002 2

Either bidder, target or vendor is UK-based 3 Deal types include

mergers, acquisitions, IPOs, MBOs, MBIs, IBOs

HOSTILE BIDS INVOLVING UK COMPANIES IN 2002

Announce Target Target's Bidder

Date financial PR

1/9/02 Holmes Place None used Cannons Group

16/3/02 Australian Oil None used Ensign Resource

& Gas Corp Service Group

14/3/02 Nationwide College Hill Assocs Guinness Peat Group

Accident Repair and JO Hambro Square Mile

Services Capital Management

22/4/02 Nationwide College Hill Assocs Guinness Peat Group

Accident Repair and JO Hambro

Services Capital Management

13/5/02 TEAMtalk Media Rawlings ukbetting

Group Financial PR

16/1/02 Charter European The Maitland Henderson Eurotrust

Trust Consultancy

22/3/02 Haslemere NV None used British Land Co

14/6/02 Woolworths Group None used Bhs

Announce Bidder's Value Outcome

Date financial (pnds

PR ms)

1/9/02 None used 205 Cannons has withdrawn its offer but intends

to make another offer in the future

16/3/02 None used 64.59 The offer was successful after Ensign

increased its original bid

14/3/02 Weber 13.01 After the board of NARS declared the offer

Shandwick derisory it advised shareholders to take no

action. GPG and JO Hambro were to make a

revised offer

22/4/02 Weber 14.83 The board of NARS was heavily opposed to the

Shandwick bid, describing the revised offer as

Square derisory. Offer extended until further notice

Mile

13/5/02 Financial 10.4 The offer failed following rejection by the

Dynamics Teamtalk board

16/1/02 Financial N/A The offer failed when CET beat off the bid by

Dynamics Henederson Eurotrust

22/3/02 None used N/A It was thought by industry insiders that

British Land would be unlikely to launch the

bid

14/6/02 None used N/A Following collapsed merger talks between Bhs

and Woolworths Group, it was rumoured Bhs

might launch a hostile cash and shares bid.

The bid failed when Bhs boss Philip Green

said he had no interest in making an offer

to acquire Woolworths

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