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Public Relations

Confidence is riding high in PR right now – so expect lots of mergers and acquisitions this year

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By Tony Walford | Founder

January 20, 2015 | 6 min read

Long-time readers of our M&A blogs for The Drum will be well aware that myself and my Green Square partners Barry and Andrew have been tipping PR as one of the hottest areas in marcomms over the next year or two.

And a number of very recent developments (last week) seem to be bearing this out. First of all, well-known London consumer PR agency Frank opened an outpost in Glasgow, McFrank; and Hudson Sandler, another London consultancy, opened an office in Hong Kong, to service its growing client base in Asia Pacific. We Are Social is to open an office on the US West Coast, a sign of its success and confidence. The management trio at Red Torch, a London-based shop specialising in sports PR, completed a buyout of the company last week.

Connect PR's deal makers

Then, one of the West Midlands’ biggest agencies, Wolverhampton-based Connect PR, acquired its local rival, Seal Communications of Shrewsbury, for an undisclosed sum. Seal, a long-established and family-run agency, was once one of the region’s biggest shops, but the Morris family has decided to get out of the PR game and concentrate on its property and machinery businesses.

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Ambitious Connect PR is younger. Founded by joint owners Rob Hampton and Hazel Crawford in 1999, it employs 20 people and has billings of more than £1.5m per year and represents clients including Persimmon Homes, Volkswagen, MAN Truck & Bus and Autoglym. Apparently the Seal brand will be retained and the acquired company’s employees will transfer to Wolverhampton.

"The purchase of Seal is an ideal fit for both Connect PR and the wider Connect Group,” Hampton told the media last week. "We have ambitious plans for Connect PR and won't rule out further acquisitions as we look to capitalise on the skills of the excellent team we've established within the business."

And finally, Instinctif Partners, an international specialist B2B, financial and corporate affairs outfit with offices in London, Europe and the Far East, bought one of London’s best-known corporate PR shops, Wriglesworth, for the famous “undisclosed sum”, and creating a 90-stong team of CA experts in the heart of the capital.

That’s quite a lot of activity for one sector in just one week, especially during a normally quiet month like January. But perhaps we shouldn’t be so surprised, because confidence in the PR industry is high at the moment, and it’s one marcomms discipline in which clients seem to be happy to spend money.

This is demonstrated by the publication – also last week – of the institute of Practitioners in Advertising’s quarterly Bellwether Report, which revealed that expenditure on PR by marketing executives has grown at the fastest rate since records began two years ago, and PR is expected to be among the main beneficiaries of a sharp increase in marketing spend in 2015.

The Bellwether Report found the increase in overall marketing spend (advertising, DM and so on) actually more than halved in Q4 2014. However, growth in the PR sector in Q4 was comparatively strong at 6.6 per cent, ahead of direct marketing (3.9 per cent), events (2.4 per cent), sales promotion (2.4 per cent) and market research (0.6 per cent).

In terms of actual spend, plans for the 2015/16 budget year have been set to their highest levels in eight years, the report also found. "Events, PR and main media are expected to benefit most from this uplift in total budgets," it said.

Despite optimism about economic recovery cooling, a looming general election and the threat of terrorism, confidence in the sector remains high, perhaps because, of all the marcomms disciplines, PR is the least "silo’ed" and best-adapted to the digital revolution.

And it seems that business confidence in PR is on the up as well. The IPA report was followed swiftly by new research from London’s Cass Business School M&A Research Centre.

The research project, entitled Selling The Story, examines the effect of PR on M&A activity – and it turns out that role is a vital one. “M&A deals are more likely to succeed if companies invest in good quality PR,” said a spokesperson for Cass. “There is a clear link between good quality announcements and deal consummation.”

The research looked at 200 public-to-public M&A deals in the UK between 1997 and 2010, and examined the part played by proactive PR. It found that deals involving PR firms have a higher chance of completion than those without, with 84 per cent of deals announced as ‘actual offers’ moving to completion, compared with only around half of those completing which were announced in response to a leak.

Time was that many senior executives at top firms were suspicious of PR – even more than they were of advertising. It was somehow more “fluffy”, less “tangible” than other forms of marketing activity.

Even the most stick-in-the-mud CEO (whether he’s planning a merger or acquisition or not) knows that in a world of social media, instantly breaking news and unrestrained rumour-mills, it pays to have someone around who can manage the flow of information.

And that can only be good news for PR.

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

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