PR industry poised for flurry of M&A activity

Merger and acquisition activity in the PR industry is set to hit a ten-year peak, according to a new report from Willott Kingston Smith Results.

On the eve of the industry's biggest merger in recent years - between Incepta and Huntsworth - the report predicts PR will become one of the top three industries within the marketing and communications sector in terms of M&A activity.

The research shows that 34 per cent of respondents - all agency CEOs, MDs or FDs - expect growth in PR agency M&A activity this year.

It is the PR industry's highest position in the annual survey since it launched in 1996. It now ranks alongside interactive/digital marketing and direct marketing in terms of likely M&A activity, and well above the advertising industry.

The predicted consolidation can be put down to high levels of confidence in the PR industry. Those marcoms agency heads with a PR element to their offering are particularly confident, with 23 per cent expecting organic growth in this area.

WKS predicts heavy M&A activity in the marcoms sector. The number of agencies seeking an acquisition in 2005 is two out of five, up from one in four last year.

However, WKS partner Amanda Merron cautioned: 'In addition to growth in income, PR consultancies wishing to sell (must) identify ways to improve their operating profit margins to at least 15 to 20 per cent - whereas our latest statistics show an average of only 9.9 per cent.'

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