Financial League Tables 2003: Steady at the top

Private equity deals and a healthy European market are instilling some optimism in the financial PR sector, but big-money deals are still few and far between, reports Richard Carpenter

The green shoots of recovery may have been spotted in the corners of the City of late, but even a cautious optimism about the sector's future has still not come to the fore for many in the financial PR world.

'We've certainly seen some indications that the market is picking up recently,' notes The Maitland Consultancy senior partner Duncan Campbell-Smith. 'Although it should be stressed that the optimistic noises coming out of the City have been rather more frequent than the actual announcements of new deals.'

This year's league tables of financial PR agency activity are testament to just how hard the past 12 months have been. IPOs and hostile bids have been few and far between, and if it wasn't for a host of private equity-related deals the picture would be even gloomier.

Based on figures provided by M&A information database Zephyr, the first top 25 table ranks financial PR agencies according to the value, and the second top 25 table is ranked by the number of deals they advised on between 1 September 2002 and 31 August 2003. This year's league tables provide a more detailed outlook and cover 12 months of deals, whereas previous tables have provided details on ten months only. Where comparison figures are shown within the copy, they are those posted by agencies between 1 September 2001 and 31 August 2002 and have also been provided by Zephyr.

All of the deals included in the rankings have a UK-based bidder, vendor or target. The top 25 tables relate to all types of deals, including M&A work, institutional buyouts, initial public offerings, management buy-ins and management buy-outs. The rankings are then split down into work on hostile bids and private equity deals to provide further analysis.

The UK influence on these tables is especially important at a time when many of the leading agencies have been turning overseas in an attempt to diversify away from the slow London market.

Despite this, the top five agencies, according to the value of the deals on which they have worked, remain stable and continue to hold a significant lead over their nearest rivals. There has, however, been a fall in average deal value for all the top five compared to last year, as there has for most agencies in this year's rankings.

Brunswick tops the table once again, with a total deal value of £49.08bn.

While this is down from last year's £77.4bn, notable advisory work for Brunswick included helping Abbey National during Bank of Ireland's doomed takeover bid, and NTL Inc during its restructuring negotiations with bondholders and shareholders. The agency also worked for PowerGen on the £1.4bn acquisition of TXU Europe's British power-generation business.

Like most of the agencies in the rankings, Brunswick witnessed a significant drop-off in the number of deals it worked on during the year - 111 compared with 124 the previous year. And, although Brunswick may not be blessed with the sort of high-profile hostile bids that were almost ten-a-penny just a few years ago, it's certainly not being threatened by any of its rivals. Its number one position in the by-deal-value rankings is as secure as ever, with its nearest rival, Citigate Dewe Rogerson, clocking up consultancy work on £27.7bn-worth of deals, compared with Brunswick's £49.08bn.

At number two in the deal-value table, CDR is another victim of the slowing London market. However, the agency's main advisory roles included working on such high-profile trans-actions as client National Grid's merger with Lattice Group, and for Wm Morrison in its ongoing bid to acquire Safeway.

Snapping very closely at CDR's heels is last year's number two, Financial Dynamics, which worked on deals worth £27.02bn. FD's figures also represent a significant fall on its previous year's total - down from £42.8bn - in line with most of the other top agencies.

FD retains its pole position in the rankings by number of deals, although it has seen a fall in the number of deals it worked on - down from 170 in 2001-2002 to 130 in this year's figures. Still, its concentration on volume rather than value does mean it has, rather ironically, seen the lowest fall in average value of deals out of all the top five agencies: £207.9m this year, compared with £252m last year.

The agency's biggest transactions over the past 12 months included advising Network Rail as it took Railtrack out of administration, and Carnival Corporation on its long-standing bid for P&O Princess Cruises. The bulk of FD's work, however, comes from smaller transactions, many of them with a private equity element in the deal. Indeed, FD comes a healthy second in the private equity rankings with 49 deals over the past year.

Finsbury, fourth in the by-deal-value table, advised on £25.7bn worth of deals between September 2002 and August this year. The firm has also moved considerably closer to its nearest rivals, with only £1.3bn difference in value of deals over the year compared with FD. It also shows a relatively small drop in the number of deals it worked on: down to 57 from 59 last year.

Finsbury's highest-profile deals of the year included advising Carlton Communications on its merger with Granada Media, which has recently been approved by regulators, and Laragrove during its attempts to acquire Debenhams.

The final member of the leading five agencies in the by-deal-value ranking is The Maitland Consultancy, with work on £24.5bn worth of deals during the period. Maitland has maintained the steadiest deal flow of all the top five agencies, by gaining just one more deal this year to 44 from 2001-2002. And it retains the highest average deal value of all its peers in the top five.

During the year, Maitland had the unenviable task of advising Railtrack during its conversion to Network Rail, but also worked on other high-profile deals, such as Tesco's attempted bid for Safeway.

New players muscling in

Although the top five agencies in the rankings by deal value look fairly secure in their leadership roles, there is hope for those trying to catch up. The gap between the number five and number six agency has narrowed slightly this year, and the fifth-placed agency is no longer significantly ahead, in terms of deal values, of the sixth-placed agency.

Last year, sixth place fell to Smithfield Financial as it accounted for £14.9bn worth of deals. This year, sixth place is snapped up by Bell Pottinger with £13.2bn - comfortably more than half of Maitland's £24.5bn. Smithfield, meanwhile, drops this year in the by-deal-value rankings to 12th place, despite having worked on 22 deals - one more than in the same period last year.

The accolade of highest new entry in the by- deal-value rankings goes to M Communications, the agency set up in 2002 by former FD directors Nick Miles and Hugh Morrison. It comes into the table at a respectable 14th place on the back of work on just five deals, with a total value of almost £2.4bn.

'We're really pleased with our performance in the UK,' says Miles. 'But what the league tables don't reflect is our M&A activity in Europe, or the fact we also worked on several situations in the UK where a deal wasn't actually done.'

He points to the Springwater consortium's approach to Somerfield and the agency's advisory role on a bid for Anglian Water. One of the highest-profile deals for which M was credited was the Northumbrian Water disposal by Suez.

Other new entries in the deal value table include Prospero Financial at number 17 and Fishburn Hedges at 20.

Aside from these new entries, the top 25 is remarkably similar to that of the previous year, even to the point of relatively little up or down movement. The most notable dropouts from this year's top 25 by deal value is Cubitt Consulting. And although College Hill Associates' deal value is worth only £1.5bn in 2002-2003, compared with £5.1bn in 2001-2002, the agency is still right up there when it comes to the number of deals, in fourth place in the table. That position is the result of having worked on 82 deals this year.

While the deal value rankings tend to give an idea which agencies are working on the highest-profile deals, the by-number-of-deals tables show which players are adept at racking up the greatest number through the year. Once again, the most obvious trend is the decline in the number of deals compared with 2001-2002 - itself a poor year. FD's continued dominance at the top of this table has already been noted, but it has seen its deal rate fall from 170 to 130 for the year. And there is a narrow gap between the next two places: Brunswick in second place worked on 111, while Buchanan worked on 109.

There are two changes worthy of real note in the by-number-of-deals table.

On the back of 64 deals, Gavin Anderson has more than doubled the 28 it worked on during 2001-2002. Much of that is attributable to the agency's ability to attract work on private equity deals - 21 of its advisory roles this year related to deals with a private equity element to them.

Tulchan Communications also warrants a mention as one of the few agencies to actually increase its deal rate over the year. During 2001-2002, Tulchan accounted for 17 deals for the full year recorded, but this time round it advised on 29.

Splitting the main tables down into their constituent parts shows just how poor a year it has been on the deal front. Buchanan leads the IPOs by-volume table, having worked on just four deals, but the combined value of these deals is only £20.5m. Finsbury, meanwhile, leads on IPOs by value - its three deals were worth £1.1bn.

The hostile bids tables make for similarly miserable reading. Brunswick leads both by value and by number, but advised on only four hostile deals through the year, worth a total of £11.1bn. Only five other agencies managed to notch up more than one hostile bid advisory role each.

Given the market conditions over the past year, it is not particularly surprising that the private equity tables offer the only glimmer of growth.

Buchanan Communications manages to lead the charge on the number of deals, having advised on 50 deals throughout the period, but it is Brunswick that notches up the largest deal value through private equity with £24.2bn across 27 advisory roles.

Many financial PR advisors see private equity-related deals continuing to be the most likely growth area in the coming months. 'We've seen a lot of venture capitalist or private equity firms competing in the deal market over the past year - they've been initiating, leading or executing deals this year far more than they have on a historical basis,' says Gavin Anderson Worldwide CEO Richard Constant. 'The private equity funds have been gearing up, and an awful lot of money has gone into cash over the past few years. That cash now needs a home.'

Other agencies believe IPO work is also set to pick up, with more companies going through the motions of choosing their advisers, even if they are not quite ready to come to market.

Buchanan CEO Richard Oldworth points out that this time 12 months ago there was very little ad-hoc advisory work available. 'It's steadily improved,' he says. 'We've seen a lot more pitch activity in recent months, but there is also a lot more competition. Clients are increasingly focused on value for IPOs, although not so much on M&A work.'

The biggest fear of the largest financial PR agencies is that the good times in the UK market may have gone for good - or at least for the foreseeable future. Years of M&A work and restructurings means there are simply more opportunities for lucrative deals to be found on the Continent than in the UK market.

'I just don't see a massive pick-up in standard M&A work as being likely,' says Miles. 'You may see deals at the smaller end of the spectrum, such as smaller IPOs, but I just can't see the return of the blockbuster deals - the big hostile bids - in 2004, or anytime soon in the UK market.' Miles, like many of his contemporaries at other agencies, has been concentrating on the continental market for the big-paying, deal-related work. 'Europe is still very healthy,' he adds.

Those sentiments are backed up by Campbell-Smith. 'The trend towards cross-border capabilities continues apace,' he says. 'You've got to be able to deliver in two, or often three, markets for the big corporate clients. We've been turning to the continental markets, and we've seen a lot of international work. In this rather harsh climate I wouldn't have liked to have been solely focused on London.'

The cautionary note that remains among financial PROs is understandable, given the economic climate of the past two to three years. Although there is a slight admission that things are gradually on the up, it cannot be said that business is racing ahead.

TOP 25 BY DEAL VALUE

Rank Advisor Number Total deal Average

of deals value deal value

(pounds m) (pounds m)

1 Brunswick Group 111 49,084.52 442.20

2 Citigate Dewe Rogerson 67 27,723.20 413.80

3 Financial Dynamics 130 27,028.05 207.90

4 Finsbury 57 25,749.26 451.70

5 The Maitland Consultancy 44 24,505.46 556.90

6 Bell Pottinger Financial 68 13,198.12 194.09

7 Euro RSCG 4 10,501.77 2,625.44

8 Gavin Anderson 64 10,086.43 157.60

9 Buchanan Communications 109 9,318.83 85.49

10 Tavistock Communications 31 7,634.69 246.28

11 Tulchan Communications 29 7,563.23 260.80

12 Smithfield Financial 22 7,479.65 339.98

13 The Hogarth Partnership 28 3,476.65 124.16

14 M Communications 5 2,386.11 477.22

15 Hudson Sandler 39 2,266.43 58.11

16 Weber Shandwick 64 2,184.17 34.13

17 Prospero Financial 3 1,905.46 635.155

18 CardewChancery 14 1,833.90 130.99

19 Penrose Financial 24 1,829.16 76.21

20 Fishburn Hedges 15 1,752.33 116.82

21 College Hill Associates 82 1,557.39 18.99

22 GCI Financial Group 6 1,413.70 235.62

23 Merlin Financial Comms 24 1,275.63 53.15

24 Grandfield Communications 3 811.96 270.66

25 Golin/Harris International 1 810.43 810.43

Data provided by Zephyr - a Bureau van Dijk Product. Agencies ranked by

deal value. Criteria: 1 Announced or completed between 1 September 2002

and 1 August 2003 2 Either bidder, target or vendor is UK-based 3 Deal

types include mergers, acquisitions, IPOs, MBOs, MBIs and IBOs 4 Average

deal value produced by PRWeek

TOP 25 BY NUMBER OF DEALS

Rank Advisor Number Total deal Average

of deals value deal value

(pounds m) (pounds m)

1 Financial Dynamics 130 27,028.05 207.90

2 Brunswick Group 111 49,084.52 442.20

3 Buchanan Communications 109 9,318.83 85.49

4 College Hill Associates 82 1,557.40 18.99

5 Bell Pottinger Financial 68 13,198.13 194.09

6 Citigate Dewe Rogerson 67 27,723.19 413.80

7 Gavin Anderson 64 10,086.44 157.60

8 Weber Shandwick 64 2,184.17 34.13

9 Finsbury 57 25,749.26 451.70

10 The Maitland Consultancy 44 24,505.46 556.90

11 Hudson Sandler 39 2,266.43 58.11

12 Binns & Co Public Relations 35 467.77 13.36

13 Tavistock Communications 31 7,634.70 246.28

14 Tulchan Communications 29 7,563.23 260.80

15 Bankside Consultants 29 277.51 9.57

16 The Hogarth Partnership 28 3,476.64 124.16

17 Penrose Financial 24 1,829.16 76.21

18 Merlin Financial Communications 24 1,275.63 53.15

19 Smithfield Financial 22 7,479.65 339.98

20 Redleaf Communications 20 586.44 29.32

21 Beattie Media 18 367.46 20.41

22 Holborn Public Relations 17 641.29 37.72

23 Fishburn Hedges 15 1,752.33 116.82

24 CardewChancery 14 833.90 59.56

25 St Brides Media & Finance 14 31.90 2.28

Data provided by Zephyr - a Bureau van Dijk Product. Criteria: 1

Announced or completed between 1 September 2002 and 1 August 2003 2

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

mergers, acquisitions, IPOs, MBOs, MBIs and IBOs 4 Average deal value

produced by PRWeek

TOP 10 IPOS BY NUMBER OF DEALS

Rank Advisor Number Total deal Average

of deals value deal value

(pounds m) (pounds m)

1 Buchanan Comms 4 20.50 5.12

2 Finsbury 3 1,145.20 381.73

3 Haggie Financial 3 178.30 59.43

4 Weber Shandwick 3 15.92 5.31

5 College Hill Associates 3 4.09 1.36

6 Gavin Anderson 2 746.82 373.41

7 Tavistock Comms 2 2.30 1.15

8 Binns & Co PR 2 0.75 0.37

9 Brunswick Group 2 -* -*

10 Maitland Consultancy 1 1,003.00 1,003.00

Data provided by Zephyr - a Bureau van Dijk Product. Criteria: as before

*Data not submitted

TOP 10 VCS BY NUMBER OF DEALS

Rank Advisor Number Total deal Average

of deals value deal value

(pounds m) (pounds m)

1 Buchanan Comms 50 1,091.26 21.82

2 Financial Dynamics 49 13,046.41 266.25

3 College Hill Associates 35 788.02 22.51

4 Weber Shandwick 34 1,350.36 39.71

5 Citigate Dewe R'son 28 19,602.02 700.07

6 Brunswick Group 27 24,236.06 897.63

7 Bell Pottinger 27 1,170.90 43.36

8 Binns & Co PR 24 280.22 11.67

9 Gavin Anderson 21 5,649.24 269.01

10 Tulchan Comms 20 7,225.03 361.25

Data provided by Zephyr - a Bureau van Dijk Product. Criteria: as before

TOP 15 HOSTILE BIDS BY NUMBER OF DEALS

Rank Advisor Number Total deal Average

of deals value deal value

(pounds m) (pounds m)

1 Brunswick Group 4 11,188.24 2,797.00

2 Financial Dynamics 2 4,909.60 2,454.80

3 Gavin Anderson 2 205.62 102.80

=4 Buchanan Communications 2 21.65 10.83

=4 College Hill Associates 2 21.65 10.83

=4 MC2 Manchester 2 21.65 10.83

7 Finsbury 1 5,999.00 5,999.00

=8 The Maitland Consultancy 1 3,243.97 3,243.97

=8 Euro RSCG 1 3,243.97 3,243.97

10 Hogarth Partnership 1 300.50 300.50

11 Tulchan Communications 1 187.74 187.74

=12 Weber Shandwick 1 109.60 109.60

=12 BMC Communications Group 1 109.60 109.60

14 Hudson Sandler 1 17.88 17.88

15 Bankside Consultants 1 4.96 4.96

Data provided by Zephyr - a Bureau van Dijk Product. Criteria: 1

Announced or completed between 1 September 2002 and 1 August 2003 2

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

mergers, acquisitions, IPOs, MBOs, MBIs and IBOs 4 Average deal value

produced by PRWeek

CASE STUDY - HANDLING THE MEDIA DURING A GLOBAL DEAL

Buchanan Communications faced some serious challenges over parent company and client WPP's acquisition of Cordiant Communications in July.

In a relatively quiet period for financial stories, the UK press found the whole of this deal fascinating, and the PR team had to handle the process carefully

Buchanan Communications CEO Richard Oldworth says WPP's successful acquisition of Cordiant earlier this year was one of the most intriguing deals he has ever worked on. What appeared to be a straightforward deal, with Cordiant's board recommending the WPP offer, was complicated by the conflicting agendas of several other parties.

Investment management firm Active Value was trying to ensure that it would not lose money on its 28.75 per cent holding in Cordiant. Elsewhere, French advertising group Publicis was previously a rival bidder, and also held an option to purchase Cordiant's 25 per cent interest in Zenith Optimedia - the price of that option could have been affected by who held control of Cordiant.

Finally, there was Syrian billionaire Nahed Ojjeh, who acquired a 10.95 per cent stake in Cordiant during the bid, and also had links with Publicis.

Ojjeh apparently failed to fully comprehend the Takeover Panel rules on disclosing interests in stocks.

'There were so many other groups involved that it almost became like working on a contested deal,' says Oldworth. He says the press continually wanted to pull them towards the side issues in the case, and away from their agenda of explaining the logic of the deal.

Part of the challenge lay in the fact that Active Value and Ojjeh said very little to the press. The media then turned to Buchanan's WPP team in search of comment and background. 'We tried to reassure them that just because the other parties were stonewalling, this did not necessarily mean they were up to no good,' Oldworth says.

The global interest in the story meant the PR team had to deal with the French and UK media until early evening, and then switch over to the US to answer the questions of the US financial and trade press.

Oldworth believes that the strong links between Buchanan and the WPP executives, including CEO Sir Martin Sorrell, stood them in good stead, enabling them to make quick decisions and respond rapidly to media enquiries.

Buchanan is now owned by WPP, but has advised it on financial PR issues since 1986 - 11 years before it was bought by the group. 'You can read the client's mind to a certain extent after that length of relationship,' Oldworth adds.

Key to the deal was making sure that any uncertainty over Cordiant's future was minimised. That meant regularly pressing home the positive aspects of the deal and trying to reduce the level of sensationalism that surrounded the story - all of this within the confines of the Takeover Panel rules.

'We were trying to ensure it didn't escalate too much, and damage client relationships,' adds Oldworth. 'This is a people business and it is client-driven. The last thing you want is a potential media dissection of the business.'

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