Clients are demanding global reach for all areas of their PR activity, and this includes the growth of multinational financial PR. So does clients' need for a world view mean the beginning of the end for the traditional role of the City-based specialist financial PR firm?
The internationalisation of financial PR has been a growing reality for some time, says Rupert Younger, a Finsbury co-founder.
'About two years ago we started to see a lot of mergers and acquisitions originating out of Europe. As a result, we initiated relationships that would put us in a position to be a recommended adviser in cross-border acquisitions between the UK and Europe.'
Younger says continental companies are increasingly targeting Anglo-American institutions for inclusion on their shareholder list. This will result in more opening up of the equity structure within these companies, leading to globalisation of the corporate finance model.
'On that basis, they will want to work with advisers who can advise them on the complex negotiations that take place with the different vested interests and on transactions with press, institutions and analysts,' he says .
But Younger points out that his aim is not to dislodge local financial PR companies in the markets in which Finsbury works.
'What companies are looking for within the financial arena is an understanding of the London and international capital markets that they don't get from their local agencies. We offer them a tailored investor relations and financial product relations capability, teamed with an Anglo-American shareholder and institutional base.'
For Nick Miles, chief executive of Financial Dynamics, recently bought by Cordiant, the business has always been built around where his company's clients wanted to go.
'Organisations want to grow outside the confines of their own geography, so it's a question of 'follow your client'. That was the case with the M&A boom of the last two or three years. We also find that an increasing number of our new economy clients don't regard themselves as citizens of one particular region of the world; they want to be brand and market leaders everywhere.
'To assist them, we obviously have to adapt and be there with them. Our European clients want NASDAQ coverage as well as local expertise in, say, Amsterdam or Frankfurt. London is not the be all and end all,' he adds.
Miles says that Cordiant's publicly quoted equity will help the company to buy businesses or attract staff.
'It's really going to spur on our international development. Business communications is a new division for Cordiant and they want us to drive the global business concept for them.'
Internationalisation is a function of the increasing weight placed on the financial PR role, says Robin Hepburn, chief executive of Golin/Harris-owned Ludgate: 'Financial PR is a specialist area and the consultants in this field get appointed because of their specialist skills. That is the same as it has always been but the importance of the role seems to be increasing.'
The internationalisation of PR can occur in two ways: through an organisation which already has capabilities in the major capital market regions, or through an agency with an international affiliate structure. The simple thinking behind it is that one needs to have a presence in the capital market time zones; it's about being able to operate just as effectively in the Far East as in the US.
Hepburn predicts that greater numbers of PR companies will buy financial PR businesses in local markets to augment existing services: 'Well thought through, structured acquisitions should yield businesses that are profitable and of good standing in their own right.'
Financial consultancies can also respond to changing client needs by developing international partnerships, says Charles Lankester, chief executive of Shandwick Financial, which has joined forces with its sister Weber group. He believes financial PR will become more complex as growing numbers of clients see the need to employ PR services to explain their international business strategies.
'In the last decade, we have moved from the lobby into the boardroom. Chief executives realised that what various communities felt about a proposed merger or offering directly translated into how successful it was. Thus the management of the communication around a deal became pivotal to its success. We used to be the last people called; now we tend to be the first,' he says.
Anthony Payne, Hill and Knowlton managing director, believes the 'United States of Europe' has become a reality in financial markets.
'Companies are analysed and grouped on a sector basis. The costs of pan-European trading are coming down significantly and investors across the board increasingly want to diversify their risks away from one domestic market,' he says.
But Payne says financial PR agencies often need to enhance their capabilities to cope with this wider market: 'Many deals happen very quickly and there is a demand for complete secrecy, which means you can't talk to outside people because the risk of a leak is very high indeed. All of this points to the idea of integrated communications with a specialist team at the centre of it all that can understand the strategic issues.'
Curtis Fox, Edelman Financial Europe director of investor relations, agrees that the logistical complexity of global deals is growing: 'We are currently dealing with an Israeli-based technology company which will be doing a public offering in 18 to 24 months. They also need technology PR in their key markets, which are Germany, the UK and the US. Just about every one of our accounts uses at least two different geographical locations.'
He freely admits that the growth of international capacity in firms such as his own poses a threat to solely London-based operations.
'I do believe we are taking away their business and that they would be under threat from our capacity to offer that broader service.'
Even proudly London-based financial PR agencies are feeling the global pull. Tim Jackaman, Square Mile chairman, agrees that because the world is shrinking and companies increasingly need to serve customers cross-border, there is a general trend in all industries towards internationalisation.
'Financial PR is no different as far as that's concerned. Those consultancies that currently work, or aspire to work, for global companies need an international capability. I don't think it's possible to grow a substantial international business based in one place. You have to expand into different geographies if you are going to really operate cross-border; you've got to be in the local markets,' he says.
But Jackaman doesn't think that this means the City-focused agency is doomed: 'Square Mile is currently a very UK-based financial PR consultancy and I think there will always be a role for the local specialised consultancy, whether it's in London, Hong Kong or New York. It really comes down to individual company strategies. If your strategy is to be a domestic specialist player, then there is every reason to regard that as a viable business model.'
So the writing is on the wall, although it is unlikely to come as a surprise to many. As financial PR agencies regroup around the new demands, the question is not whether to go global, but which method to choose.
WHO'S WHO IN THE CITY AND BEYOND
Has 280 staff worldwide, with main hubs in London and New York. Also has offices in Paris, Brussels and Johannesburg and will be opening Frankfurt office in the new year. Regards the offices as separate businesses but very much part of the Brunswick firm, and moves staff around the international offices.
A 50-year-old US-based company. Has a strong financial team in London. With 100 staff, this is its largest financial team for Europe. The London office was the first to be established outside of the US. Very active in Germany, with offices in Munich, Frankfurt and Hamburg. Extensive experience of taking companies onto the Neue Markt and the Frankfurt Exchange. Brussels office has a public affairs focus.
Bought by British advertising company Cordiant, the 10th largest communications group in the world, in September; previously owned by a private equity group. There are 140 London staff. Cordiant has about 6,000 employees worldwide. New York-based sister company Morgen Walke (investor relations specialist) also owned by Cordiant. Other acquisitions in the US not ruled out. Keen to establish a presence inAsia, particularly Japan. Close to achieving a presence in Germany following work for Vodafone.
London office, with 55 staff, serves about 60 clients, half of which are FTSE 200 companies. Some are Euro 300 companies. Runs an organisation called Finsbury International Public and Regulatory Advisers (FIPRA), which is a revenue share network of competition and regulatory experts in every member state in the European Union. Active in the US through an affiliate office, with plans to turn it into a wholly owned office shortly.
Owned by Interpublic. Ludgate started in London at the end of 1990 and established a New York office in 1992. That office was merged early this year into the Golin/ Harris office in New York. Golin/Harris has offices in Hong Kong, Singapore, London, Frankfurt, Madrid and New York and also has exclusive relationships with affiliates in various territories. Ludgate has had a Hong Kong office since 1995. This office, as a result of the recent brand reorganisation within the Interpublic PR companies, has become part of the Weber Shandwick structure.
Parent company International Public Relations has been bought by US company Interpublic, which also purchased Ludgate. Recently combined with Weber to form the world's largest public relations firm. This starts officially on 1 January 2001 but much of the work is well under way. Active in London, New York, Los Angeles, Singapore, Tokyo, Hong Kong, Frankfurt, Paris, Belgium, Germany. Offices in each hub with dedicated financial teams.
Established 12 years ago and has 50 staff, all based in London. Undertakes international work for clients through affiliates. Regards the US as a major market for clients, particularly technology-based ones. Will not comment on discussions regarding expansion of New York interests. Increasingly active across Europe.
BLUEPRINT FOR THE LONDON STOCK EXCHANGE
Europe's largest stock exchange, the 199-year-old London Stock Exchange (LSE), demutualised in March 2000. By August, it was engaged in merger negotiations with the German Deutsche Borse to create a new merged business to be named IX.
Hill and Knowlton Financial's client, OM, a Swedish group which owns and operates the Stockholm Stock Exchange, decided it could take the LSE further than the IX proposal and launched its own pounds 1 billion bid.
According to H&K Financial MD Anthony Payne, OM was a relatively unknown quantity, almost unheard of by the media. His own company's preliminary research showed that more than 67 per cent of the media supported the IX proposal.
'The LSE shareholders were also its major customers and it had only recently demutualised,' explains Payne. 'The LSE was regarded as a national institution; it was not perceived to be an ordinary company.'
He says OM's bid turned hostile when LSE management refused to enter into discussions with the new bidder. The takeover bid therefore had to be fought by direct appeal to LSE shareholders through the media, in roadshows and in City boardroom meetings.
The PR work took place on multiple fronts to meet this challenge. The campaign theme was 'Blueprint for the London Stock Exchange' and H&K Financial adopted an integrated approach to the bid providing a one-stop solution based on total security and instant responsiveness throughout the bid process. The large team included financial and political communicators as well as designers and production experts, in London and Stockholm.
There was a daily conference call with OM and its other advisers (H&K Sweden, Lazard and Lovells) as well as a central bid timetable. Because media relations were crucial in maintaining support for the bid, H&K deployed a range of techniques to ensure key media felt that they were being properly informed. A single database was prepared which was connected to fax and e-mail engines for efficient distribution. Comprehensive schedules of interviews were arranged. Techniques included going to the main media pools, such as BBC's Wood Lane centre and ITN's Grays Inn Road location, and visiting journalists in their offices.
Journalists were also invited to join segments of the regional roadshows, which H& K Financial took to Dublin, Birmingham, Leeds, Glasgow and London.
The roadshows were attended by more than 400 shareholders. Media monitoring took place around the clock and H&K Financial conducted its own shareholder polls as well as using independent surveys and one-to-one meetings with shareholders. The results of this research were fed back into OM's bid strategy.
The results of the campaign have been impressive, with total OM media coverage across the 60-day bid period (which closed on 10 November) consisting of 5,386 monitored clippings across the on-line, national, international, regional and trade press, the majority of them favourable to OM. There was also extensive television and radio coverage.
Most importantly, the LSE withdrew from the IX deal. Payne says this victory in particular has boosted OM's image. 'Prior to its bid for the LSE, OM was a growing but relatively unknown company. OM's profile was dramatically lifted as a result of the bid.'