NEW YORK: A StevensGouldPartners survey of independent PR agency owners found that 64% have no current plans for succession or exit strategies.
StevensGouldPartners, a firm specializing in facilitating mergers and acquisitions in the PR industry, presented the results of the survey at its spring conference entitled "Making Your Vision a Reality Through Mergers and Acquisitions."
Of the 120 US and Canadian agency owners surveyed, 60 responded.
Art Stevens, one of the two managing partners at the firm, said he was surprised by the high percentage of independent PR firm owners that did not have a succession plan in place.
"It's not having a will or carrying life insurance; it's a glaring omission."
Of the minority of agency owners that said they had plans in place, 28% expect to sell the firm to an another agency, while 26% plan to sell the firm to employees. Another 20% plan to work as long as they can, which is, in itself, not a succession plan, Stevens said.
Even more bewildering, he said, was that 70% of respondents didn't expect to make one in the next five years.
Stevens, who sold his independent firm, LobsenzStevens, to the Publicis Groupe in 1999, said his experiences gives him the ability to understand the mindset of the independent PR firm owner.
"They're more concerned about the here-and-now, rather than tomorrow and the next day because the PR business is about [clients asking] "what has he done for me lately?'" Stevens said.
He added: "We're saying, 'you have to change that to protect your largest asset."
Another worrisome statistic was that 65% of PR agency owners are confident in their firm's ability to go public if that's the route they wish to take.
"There are many more independent PR firms than one realizes that might not list with PRSA [or the trades], yet they have good businesses, but they're not involved in the industry per se," Stevens said.
He estimates that there are well over 2,000 firms that have at least one to two employees, and only a small percentage of those firms will be acquired.
"In order for any PR firm to be acquired, they have to have good financials, the right team, sufficient value, the right focus, and geography," Stevens said.
Steven's first piece of advice for independent PR firms is to think more like businesses.
"A lot of PR firms were started by people who knew how to do PR well, but weren't necessarily great businessmen."
He suggested the firms get a proper operating structure in place, which will lead toward higher revenue generation. This way, he said, your firm's value is high regardless of your end goal.
"Even if you're selling the business to your employees, you want to have an asset for yourself. You don't want to just give it away," Stevens said.