Finn Partners to Enter Nashville in Tripartite Deal

Original printed in the Deal Pipeline on January 30, 2015

by Jaewon Kang

Public relations house Finn Partners has continued its acquisition spree by sealing a three-way deal in the Nashville market, and the New York company isn’t ready to stop hunting.

Finn Partners announced Jan. 22 that it has agreed to merge Seigenthaler Public Relations Inc. and DVL Public Relations & Advertising and then acquire the two Nashville firms for an undisclosed sum.  The company said the combine agency will be known as DVL Seigenthaler and will have annual fees of around $11 million.

When Finn Partners and Seigenthaler met for the first time about a year ago, joining forces came up in their conversation, Finn managing partner Peter Finn said in an interview.

“The possibility came up in our first meeting,” Finn added. He said at that point, Finn Partners was looking into an acquisition possibility after recently having closed two deals.

The “Nashville market was evolving to a point where a national or global firm was going to enter the market, and [Seigenthaler] wanted to be ahead of that curve,” Finn said of the target. It turned out Seigenthaler and DVL themselves actually had talked about merging in the past, and Finn Partners decided to combine and acquire them, he explained.

Since its inception in 2011 as a spinoff from New York’s Ruder Finn Group Inc., Finn Partners has been an aggressive acquirer. In 2014 alone, Finn Partners scooped up tech agency Johnson King Ltd. of London and the healthcare and education divisions of New York’s gabbegroup.

The firm has clients in various industries including technology, consumer and education. It was generating around $20 million in annual fees when it launched and with the latest acquisition will now generate around $65 million, Finn said, adding that two-thirds of the company’s growth has come from acquisitions and the remainder organically.

In 2013, Finn Partners came in seventh place nationally with annual net fees of around $44.4 million, according to J.R. O’Dwyer Co., a research firm that tracks the communications industry. Edelman Inc. of New York, APCO Worldwide Inc. of Washington and Waggener Edstrom Worldwide Inc. of Bellevue, Wash., are the three big agencies focused solely on PR. The firms compete with advertising holding companies such as Interpublic Group of Cos. (IPG), WPP plc (WPPGY) and Publicis Groupe (PUBGY).

“We will continue to grow organically and through acquisitions,” Finn said, adding the firm is considering some acquisition opportunities now.

He went on to explain that he typically looks for opportunities to grow the firm’s footprint in markets where Finn Partners already has a presence, to enter a new market or to strengthen practice areas.

“I’m not generally interested in companies looking for exit strategies,” he said, adding that Seigenthaler and DVL themselves were not looking for exits.

“It’s a classic M&A transaction that is very hard to pull off,” said Rick Gould, managing partner at PR consulting firm Gould Partners LLC.

Gould, who provided financial advice to the two targets in the transaction, explained Seigenthaler had been wanting to enter a bigger playing field.

Together, Seigenthaler and DVL will be one of the biggest PR houses in the Southeast, he noted, adding that the three firms are also a great cultural fit.

“The thing about Nashville is that it’s the best kept secret,” Gould said. While New York is still the PR capital of the world, he said, Chicago and San Francisco are also strong markets for public relations.

Midsize PR firms in need of additional money and investment have been driving M&A levels in the space, Gould noted, adding that smaller players are finding that bigger agencies are better homes. Buyers, on the other hand, are looking to fulfill niches, specialties and locations, he said.

Finn Partners received legal counsel from Davis & Gilbert LLP. Seigenthaler retained Waller Lansden Dortch & Davis LLP as a legal adviser, while DVL worked with Nelson Mullins Riley & Scarborough LLP.