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After a spate of PR agency acquisitions, why is PR so hot right now?

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By Barry Dudley, Partner

November 25, 2014 | 6 min read

Amid all the noise generated by the big mergers and acquisitions news – such as Publicis’ audacious multi-billion dollar swoop for Sapient Nitro earlier this month – it’s sometimes easy to overlook other, just as interesting stories.

MWW CEO Michael Kempner

Over the past couple of months we’ve written quite a lot about PR, because that’s where a lot of the action is right now.

In recent days, activity has been turned up a notch – there were no less than three PR agency deals in as many days: first, Mission Marketing Group merged Bray Leino with Speed Communications after it acquired the latter; then mini-holding group Porta bought specialist PR shop PPS for £6.2m, and merged it with its existing agency Newgate Communications; and finally, long-established US indie MWW bought one of the UK’s best-known small agencies, The Braben Company.

Mission we’ve written about many times for The Drum. It’s an ambitious, London-based, publicly-listed mini-group, with an array of agencies (Balloon Dog, Splash, Story etc) across various marcomms disciplines. Over the past few years it has made some canny acquisitions (including specialist events agency Brandon Hill) and now seems to be building itself into quite the PR powerhouse.

Speed, a 25-strong shop based in London Bridge, was acquired from investment and management services company Writtle Holdings for an undisclosed sum, and its clients include GSK, Lucozade Sport, The Economist and The FT.

Bray Leino PR, which Mission already owns (and which was part of the full-service Bray Leino agency), employs 40 staff and has offices in Bristol and London, and counts Virgin Media, Samsung, Remington, RAC and Wincanton among its clients. Despite BLPR being the bigger entity, it will disappear and be absorbed into the Speed brand (but the broader Bray Leino brand will continue).

Kate Bosomworth of Speed, Alison Weir and Kelly Pepworth of Bray Leino will be combining their talents to form a team of three managing partners. Roberta Fuke of Bray Leino will become CEO and deputy chairman, while Will Whitehorn, who has worked closely with the Speed team for the last three years, will become non-executive chairman.

Porta, which is another listed mini-group, has paid £6.2m in shares and cash for PPS, which specialises in reputation management, community engagement and something called “political consensus building”, advising on projects such as complex property, infrastructure and energy developments. In other words, lobbying (with a specialism in the construction industry).

Porta, which owns three PR and reputation management firms of its own – Newgate, Redleaf Polhill and Thirteen Communications – said it would merge PPS with Newgate, to form a new company called Newgate PPS, with former PPS managing director Stephen Byfield becoming head of Newgate’s public affairs practice in London and Brussels. Byfield will work with Newgate managing partner Deborah Saw, who now heads a business with 82 staff in the UK.

PPS produced fee income of £4.6m and pre-tax profit of £706,277 in the year to 30 April 2014 and has 45 staff operating from offices in London, Manchester, Bristol, Aberdeen, Edinburgh and Cardiff. The Porta shares PPS shareholders will receive as part of the consideration are subject to a 24-month lock-in agreement and a further 12 months orderly market period – a smart way to help ensure interests are aligned.

Finally there was MWW. This American outfit, founded by former Democratic Party fundraiser Michael Kempner, is apparently one of the top five independent firms in its home territory; it first entered the UK in a big way last November with the purchase of specialist agency Parys (now the UK arm of MWW). At the time of the Parys deal, Kempner pointed to London as "the capital of Europe", adding that it was a strong location from which to oversee further expansion.

Now he has another string to his bow and moves another step closer to his stated goal of making MWW “the UK’s biggest mid-sized PR company” with the recent Braben purchase. Braben is a specialist in B2B PR, with a strong focus on telecoms, tech and media (clients include Bauer, Starcom Mediavest and the Weather Channel) and would seem to fit snugly with MWW UK’s client book, which includes the BBC, News UK (formerly News International) and NCR.

So why is PR so hot right now? First of all, it’s a discipline which can be both highly focussed (on a particular area, like tech or lobbying; or with a channel, like consumer or B2B) and generalist, and which, especially in a wired world, can “steal” work from other disciplines, thus making PR a very attractive area with lots of growth potential.

In many ways, it’s also because PR is a far less consolidated industry than advertising. There are – in the UK at least – some giants, the Hill & Knowltons, Edelmans and Webers, but there are also thousands of small shops out there, many of them one (wo)man bands, and new agencies pop up all the time. PR requires little capital outlay – you could set up shop from home, all you need is a computer, a phone, some knowledge and a decent contacts book.

And human capital is the most valuable asset of all: PR really is a people business. The connections and skills of the best PR practioners are highly valued, and much in demand – what these three deals are really about is acquiring and integrating talent. The contact books and experience offered by the best people at Speed, Braben and PPS are worth their weight in gold.

Barry Dudley is a partner at Green Square, corporate finance advisors to the media and marketing sector

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