Amid the dramatic and ongoing changes within the media and marketing industries is the accelerating rate of M&A transactions within the PR field.
PR firm owners, including heads of boutiques, smaller shops and mid-size firms, are giving more serious consideration to selling out. Many of these owners are products of the baby-boom generation and would like to sell their firm and strike a new match.
At the same time, both management consulting companies, such as Accenture and Deloitte, as well as private equity players, are boosting their investments in PR products and services.
While each PR transaction has its own variables and rhythms there are some essential steps that PR firm owners initially need to take when they put their agencies in play.
To demonstrate the business appeal of your PR firm—and leave no mystery that your intentions are sincere—PR firm owners and C-suite executives must create a baseline to help potential suitors evaluate the operation and determine what they may be acquiring. These steps include:
> Establish a timeline for ongoing review.
> Measure performance vs. goals (and don’t sugarcoat any information).
> Revise goals if necessary (be flexible and think long-term).
> Brainstorm and revise the strategic plan if the action plan and operating plan warrant revision.
Arguably the most challenging aspect of developing a strategic plan. PR firm agency owners and C-suite executives need to examine not only the present state of their agency, but have to look well past the horizon to give buyers and would-be suitors a clear picture on where the agency is headed in terms of profitability and valuation. At the core of the implementation plan is a ‘SWOT’ analysis, which is designed to give you a cold-eyed assessment of your firm. Here’s the entire process:
> Strengths: Loyalty of your clients, quality of work/campaigns/core competencies.
> Weaknesses: Leadership, poor business acumen, staff churn, antiquated technologies.
> Opportunities: Market needs for your specialties, recruiting new talent (particularly to produce and measure digital programming), new business, products and services.
> Threats: Onerous regulations, bad press coverage, loss of a major client who was funding a good percentage of the revenue.
Once you commit to implementing the strategic plan it’s time to execute and make potential buyers aware about both the value of your firm and sales strategy. An action plan needs to include:
> List of the specifics of each department and what each department/business unit brings to the table.
> Determine how you will evaluate your results (this is mission-critical for potential buyers, who will be able to gauge through reading the results whether the transaction has a lot of upside).
> Outline how you will correct things if results have not met expectations.
> For the sake of transparency, document how you will revise the overall plan.
What do you think of the strategy? What would you add to it?
This article is an excerpt from “The Ultimate PR Agency Financial Management Handbook: How to Manage By The Numbers for Breakthrough Profitability of 20% or Greater,” by Rick Gould. Gould also wrote “Doing It The Right Way: 13 Crucial Steps For A Successful PR Agency Merger Or Acquisition.”
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