COMMENT: EDITORIAL; Canny shopping in the PR market

It is surely a sign of the good times returning for consultancies, that there is a mild bout of acquisition fever doing the rounds. Business is growing, there is cash in the bank and there is more new business around than most can realistically handle.

It is surely a sign of the good times returning for consultancies, that

there is a mild bout of acquisition fever doing the rounds. Business is

growing, there is cash in the bank and there is more new business around

than most can realistically handle.



While few of the discussions are likely to lead to anything concrete,

there is an air of urgency about them which stems from the prospective

purchasers’ ambitions to capitalise on the current strong growth in the

market.



Some international groups are looking for a quick way to achieve

critical mass in the UK market, and other smaller firms are looking for

a boost on to the next rung of growth. Interestingly, it is also being

considered as a solution to the recruitment problem that is facing many

consultancies at the moment - the scarcity of good quality staff,

particularly at senior account handling level. Instead of struggling to

find one or two individuals while someone else tries to lure your

existing stars away, the theory goes, why not buy a whole team plus

clients, lock stock and barrel?



If only it were so simple in practice. Without wishing to sound unduly

party-pooping, both buyers and sellers frequently overestimate the short

term benefits the deal will bring, while underestimating the effort

needed to make the relationship work in the long run.



In order to be worth pursuing to their conclusion, such deals must

deliver tangible benefits to both sides. Otherwise it will a risky

investment. Above all the cultures must be compatible, the client lists

complementary, and it must all be underpinned by a clear strategic

vision of the future direction of the consultancy business and the

company’s own position in the market.



Occasionally, opportunistic deals can work magnificently. A likely case

in point is the re-entry of Biss Lancaster founder Adele Biss into the

consultancy market, in a deal which secures her the rump business of Ian

Greer Associates. But one reason why this deal looks so promising is

because she brings a wealth of experience but no existing agency culture

to impose, and because she is taking on a consultancy which wants to

start afresh.



But for most agencies, a quick glance at the Top 150 should be enough to

disabuse them of the notion that it is possible to muddle through a

merger without meeting all of the above pre-conditions. Those

consultancies and groups that have generally got it right now dominate

the rankings. Those that didn’t have either tumbled down the rankings or

have collapsed altogether under the weight of their expectations.



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