EDITORIAL: Shandwick plans for the next stage

The meticulously crafted changes at Shandwick UK, while not revolutionary, should clear up some of the confusion about the brand in this market. This week’s announcement completes its transition from a clutch of independent agencies acquired in the late 1980s into a single entity. As such it is a milestone for the company.

The meticulously crafted changes at Shandwick UK, while not

revolutionary, should clear up some of the confusion about the brand in

this market. This week’s announcement completes its transition from a

clutch of independent agencies acquired in the late 1980s into a single

entity. As such it is a milestone for the company.



But aside from making itself more comprehensible and accessible to clients

in the UK, the parent group will also be looking to impress another key

audience - its investors.



That the City doesn’t understand Shandwick was fairly evident from the

reaction to last year’s defection of several directors from Shandwick

Consultants. The financial press translated what was an evident blow for

the UK operation into a crisis for the worldwide group, despite the fact

that the lion’s share of its income comes from overseas, with well over

half generated in North America.



Since then, and despite some solid group results, the share price

continues to hover at around 48p, although some analysts are suggesting

the price should be over 70p.



The problem is not the underlying soundness of the business, which is now

on an even keel. Its debt has been whittled down to a manageable level and

is expected to be below pounds 20 million within three years. Meanwhile,

the earn-out payments which contributed so much to the financial pressure

on the company in the early 1990s have slowed to a trickle and will dry up

altogether this year. The appointment of Colin Trusler as group operations

director, charged with making all its businesses more efficient, will also

comfort shareholders.



But the problem is that, like its smaller quoted PR fellow Chime

Communications, Shandwick faces an uphill struggle to excite the City. All

people businesses are perceived to be volatile, and PR consultancies in

particular suffer from a general lack of understanding about the service

they provide. Hence Chime’s purchase of ad agency HHCL last year, which

was aimed at doubling the size of the operation and increasing its

visibility in the City.



For Shandwick, exercises like the consolidation of the UK operation will

make the previously piecemeal company easier to understand. The

introduction of new products like the recently announced Step evaluation

programme will also help its reputation as an innovator.



But it is hard to escape the conclusion that something more spectacular

may ultimately be needed to return the kind of shareholder value the City

expects. Globally, Shandwick is now the only independent PR group of its

size. The pressure to find itself a partner to take the company on to

the next level may now be irresistible.



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