APCO plans 'aggressive' expansion after capital injection and ownership changes

APCO plans to be "lot more aggressive" in its expansion strategy following a financial restructure that has seen management and employees take a greater stake in the agency.

APCO founder Margery Kraus
APCO founder Margery Kraus

The US-based global comms agency has access to a "very substantial" fund for expansion following the change, founder and executive chairman Margery Kraus told PRWeek.

A minority stake in the business previously held by WindRiver, the private equity firm that has invested in APCO since its management buyout in 2004, has been bought out by a new funding partnership of Citibank and Monroe Capital.

The stake now held by Monroe and a small number of other individual outside investors is around 10 to 15 per cent, roughly half that previously held by WindRiver.

The rest of WindRiver’s stake has reverted to the APCO management team and employees – around 70 APCO employees own a stake in the business, which operates in 80 markets and generated revenue of $120.6m in 2016.

Kraus told PRWeek the aim was to "consolidate our employee ownership".

PRWeek reported in December 2015 that APCO was in discussions with potential investors, with a sale or partial sale to Teneo understood to be among the favoured options. Discussions with Teneo ended without a deal, but Kraus later told PRWeek the firm had a "few preferred options" for its future.

Regarding the new investment, Kraus said: "I have never really had intentions to have a change of control and we value our independence. What we were looking to do was to find an ideal way to unite around that to take the company forward."

Monroe Capital, based in Chicago and operating globally, targets middle market and lower middle market investments. Kraus said: "They have provided us not only with the necessary capital to buy out minority investors, but also have made a significant commitment to APCO growing forward that will enable us to have access to capital for our growth, for our acquisitions, and to really be much more aggressive in the market place."

Kraus declined to reveal the sum available but said it is "very substantial". She said APCO has "never had that kind of access to capital" and the group has grown "pretty much organically" since it was founded in 1984.

She said APCO did not have a "primary list" of acquisition targets.

"I think we’ll be looking in various sectors that align with our core business, more than we’ll be looking at geographic expansion. We could do some things in existing markets. It would be very unlike APCO to go into a new market by acquisition."

Kraus added that APCO had no specific targets for growth, saying: "I don’t think we’ll put some artificial target on the business."

Leadership team changes

Separately, today APCO also announced three new members to its Global Leadership Team, who the agency said will help direct future growth for the firm. The new members are: Robert Ardelt, managing director of APCO’s Germany offices; Marc Johnson, global practice lead of APCO’s digital practice; Kelly Williamson, managing director of APCO’s Raleigh, NC office; and Agnieszka Yank, APCO’s chief talent officer.

In addition, Kraus revealed that APCO would be announcing a new board in the next few weeks.

"We’re looking for world class people to come in and introduce advice and counsel as we get to this next level of operation, which is significantly advanced even from where we were five years ago."

Kraus confirmed that she would remain as APCO chair. At the end of 2014, international president Brad Staples was named as her successor as CEO alongside a change in senior leadership.

Regarding the new investment in APCO, Ted Koenig, founder and CEO of Monroe Capital, said: "We are excited by the potential of what we believe is a premier firm that is truly making a difference for the clients they serve.

"We look forward to helping APCO identify growth opportunities, including potential acquisitions for the future. It is especially gratifying to support a successful business that is majority women-owned, which is one of our priority areas for investment capital."

Elizabeth Perricone, Citibank MD and head of US Middle Market Banking, said: "Citi has been APCO’s global financial advisor for more than a decade. We have encouraged APCO’s growth and are glad to participate in this next, important step."

APCO was advised in the transactions by investment bank Petsky Prunier as well as law firms Gibson Dunn and Godfrey Kahn.

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