Deals, deals, deals
by Alicia Buckley, Consultant
“We believe the strategic communications space is absolutely at an interesting and pivotal point,”
Philipp Freise, co-head of European private equity at KKR.
This year has been a busy one for deals within the London corporate affairs market. A quick snapshot – Teneo bought Tulchan, Hanbury sold Forefront to DeHavilland, Milltown Partners bought Taso Advisory, Camarco was acquired by APCO, ICR bought Consilium, Powerscourt went into Morrow Sodali and Lansons was acquired by Team Farner.
What is happening and why?
There is confidence in the market that communications firms will continue to perform well, even though there are short-term fluctuations. These deals have a goal behind them whether to scale up existing expertise, broaden geographical reach or add a brand-new discipline to the capability of the business. In a couple of other instances, we have seen management consultancies wanting to enter the communications market and buying a firm is a low-risk way of doing that. All of this is against the backdrop of law firms entering the fray. DGA is continuing to prosper and Schillings also announced they would be building a communications business.
People are the asset
A challenge and an opportunity when these mergers and acquisitions happen, the people are the asset and that is where value is retained and made. Having a plan to integrate two teams of people professionally and culturally needs careful planning and shouldn’t be rushed. Even if the skills are entirely different you need to ensure that people feel like they are one firm and have a clear identity. A smooth integration process is the best indicator of the success of the merger through retention of staff and clients. We have seen occasions where decisions made in small rooms have an adverse knock-on effect. Whilst you can’t widely announce plans to an entire agency, it’s worth considering who in your business does need and deserve the opportunity of finding out a deal is happening ahead of a public announcement.
Continuation of these deals
With another crop of independent agencies reaching the 100-200 mark in terms of headcount and larger agencies coming to the end of the private equity cycles, we expect these transactions to continue. New firms that inevitably result from those leaving after earn-out periods will take heart from the recent valuations of Powerscourt (£50 million) and Tulchan (£65 million) as something they can aspire to.
The question will be if any of the bigger firms press ahead with a listing, likely to be in the US, in order to create more capital or if we will see more of these private equity-backed acquisitions continue into 2024. We suspect the latter.
MadlinHanna Consulting is a recruitment consultancy specialising in public affairs, corporate communications and financial PR. Contact us in London on +44 (0) 20 8088 4102 or in Brussels on +32 (0) 2 586 38 98 for more information or a confidential conversation about these services and more.