The Stevens Group | PR Agency Merger & Acquisition Consultants

LOVE IS IN THE AIR

Wed, 25 Oct 2023 23:07:53 GMT

Love Is In The Air

Oct 2023 | Written by Art Stevens of The Stevens Group for CommPro

Five Aspects to Consider When Being ‘Romanced’ by a Prospective Buyer

As a PR agency owner, possibly the most critical decision you’ll make is when to sell your firm eventually.

This experience can be quite daunting for anyone, especially if you’re not accustomed to the complexities of the M&A process. It can also be overwhelming, arduous and emotional if you’re not fully prepared for what’s ahead.

If a prospective buyer is courting you, it’s essential to first and foremost understand what they are looking for in your agency. When you know what motivates them to buy, you can take carefully measured actions to reap monetary benefits in a potential sale and ensure a sound cultural match and positive chemistry among leadership on each side.

What to Think About During the Courtship Period

To decide if the M&A journey makes sense for your agency, it’s crucial to start by answering some key questions. For example, is now the right time? More importantly, are you ready ? Has your prospective buyer made other acquisitions? If so, do they have references you can talk to about their experiences before, during and after the process?

In my many decades of consulting experience in the PR agency M&A space, I always stress the importance of developing a positive working relationship between the seller and buyer right out of the gate – it’s truly the key to success . After all, an agency sale is more than just about the money; it’s about creating a healthy, positive and productive environment for the seller and their team that ultimately empowers.

Here are five considerations that can help you determine if it’s the right time to sell, especially if you’re currently being “romanced” by a prospective buyer:

1. Ensure that both firms’ synergies, collegiality and overall quality of life are sympatico . Synergy is a key element of a sale – it can exude a collaborative atmosphere and breathe new life into an agency. A newly formed or evolved PR firm – through consolidation and a solid united vision – can allow for greater purchasing power, reduce overhead, allow for better access to innovation and improved technology and potentially bring down the cost of debt and other benefits.

2. Make a list of questions to ask . Have your questions for a buyer lined up before the first meeting. Here are some ideas to get you started:

· Why are you interested in this this acquisition?

· What is your firm’s niche?

· How do you see our roles in the future?

· What is the typical deal structure? Is it based on earn-out? Or will it be an up-front payment and an earn-out?

· What has been your growth pattern over the past handful of years?

· Where do you get funding for deals?

· What changes will go into effect immediately?

· Will my agency and brand be absorbed into your agency, or will it remain independent?

· Can employees on both sides expect a round of layoffs, or can we negotiate a grace period?

· Will leadership be required to stay on for a specific length of time to onboard the new owners/management?

3. Do your due diligence – check that the buyer isn’t running a pressure cooker ! Show up armed with background information on each prospective buyer ahead of time. Never hesitate to ask them the same tough questions they’re preparing to ask you about your business. Study their portfolios (and any portfolio gaps) via their websites and SEC filings (if publicly traded). Ascertain how you can best position your agency and its services with everything they have to offer.

4. Determine if your firm is intended to be a meaningful, carefully thought-out strategy within the prospective buyer’s future . In other words, determine whether the prospective buyer is worth investing your time and effort into. The buyer’s goal should be to develop a foundation for a business discussion, impress you, keep you interested in learning more and demonstrate their full commitment to the proposal.

5. Show genuine interest in learning more about the buyer . Don’t be detached or impersonal; you will probably turn the buyer off immediately. Reflect in your voice and body language that you are interested in learning about their agency and getting to know them as a person. Also, show them that you’ve thoroughly done your research. Remember that you are building rapport with the buyer, so first impressions mean everything at this point.

The Bottom Line

There’s no arguing that the M&A process can be daunting. With so many considerations and steps to take before, during and after the process–and unanticipated obstacles along the way – it’s essential to have the proper support .

Enlisting the guidance of an experienced facilitator like a team member from The Stevens Group can help make the process go smoothly, protect you and your employees and get things done the right way the first time around. Sellers need someone who won’t slow the deal down by working to anticipate every imaginable (yet unlikely) risk and obstacle .

Whether you aspire to retire, hike, bike, golf, spend more time with family or move on to your next professional venture, a proper strategy with the support of a professional can help you sell your agency successfully –and avoid potential headaches. Creating realistic expectations in two areas – time and money – is also important.

Whether you’re actively working with a prospective buyer to sell your agency as soon as possible or slowly considering a future where you sell, I wish you the best of luck. And remember to be patient. If you want to sell, you want to ultimately sell to the right buyer for your situation . You want the culture to be as close to perfect as possible – and I believe that’s the most critical element.

_________________

ART STEVENS

Art Stevens is managing partner of The Stevens Group, a firm that specializes in facilitating mergers and acquisitions in the PR and digital/interactive space.

https://theartstevensgroup.com

Selling Your PR Agency? Your Employees Might Thank You

Wed, 25 Oct 2023 22:55:39 GMT

Selling Your PR Agency? Your Employees Might Thank You

Fri., October 13, 2023

By Art Stevens

Let’s face it – many of us are familiar with the numerous advantages to an owner when selling a PR agency. There’s the appeal of transferring your firm to new owners and generating liquidity while also allowing you to remain involved in the business if you desire. The process also presents an opportunity to maintain your involvement with the agency you worked so hard to build – in an evolved role – serving as a consultant or advisor to help the buyers ease into the transition.

But are there any obvious benefits to your loyal team members and employees?

Understandably, many employees feel anxious about all the changes – there’s uncertainty, fear of job loss and potential culture clashes to all worry about.

Beyond the palpable change of being shifted around and restructured internally, the continued performance and loyalty of your remaining employees depend on how your M&A process is implemented.

In my experience handling countless successful PR agency M&As over the years, I’ve observed that the benefits of selling a PR agency don’t only accrue to the owner but to their loyal staff as well.

Sure, their lives change, which can be difficult for some people. But in the end, it’s usually for the better. Employees can find new routes to progress in their careers. The whole culture shift can itself be a positive one.

Top 10 Employee Benefits Following an Agency Sale

An agency sale should be viewed as fundamentally advantageous for employees. They often create more robust firms that remain operational and, in many cases, become even more competitive. Whether the goal of the M&A is to “save” a firm from failing or merely to scale it up and work toward molding it into a more competitive organization, they typically put companies in a stronger position.

There are several positive impacts that an agency sale can have on employees, depending on the terms of the sale and the specific circumstances. Here are some potential benefits:

1. New career ladder to success . Opportunities will arise in larger organizations that simply don’t exist in smaller agencies. This can open new doors for your staff members, giving them the chance to move into a more senior role. And if the merger results in a more financially stable business, there’s also the possibility of eventual higher compensation.

2. Personal growth and development opportunities . When a M&A takes place, there are often training opportunities, which, in turn, gives enthusiastic team members access to new skills. Keep in mind: staff members want to feel like they’re learning, growing and improving. And with new people in the mix, there are also new experts and colleagues to learn from and evolve as a team.

3. Soft skills development . Believe it or not, new or unfamiliar situations can help your staff sharpen soft skills, such as time management, critical thinking, conflict management techniques and teamwork. Previously established teams may evolve due to the addition of staff from the acquiring agency, which can allow them to put their communication skills to good use. Collaborating with new team members can also expose your staff to diverse perspectives.

4. Different point of view . Staff members gain better perspectives just by being on the team of a more sizeable, growing company. Further, the brand recognition of a more prominent agency can open doors for employees in ways that don't necessarily materialize when they work at smaller firms.

5. More — and better — benefits . In some scenarios, the staff of the newly created agency receive new stock options or other benefits as a reward/incentive. Depending on the terms of the sale, these may include other financial incentives such as bonuses or profit-sharing arrangements. The new entity also may offer enhanced benefits packages, such as healthcare, retirement plans and other perks.

6. Better job security . An agency sale can positively impact staff members if the firm was in trouble or there was already a fear of possible job loss. Merging with another agency often creates a more stable business, giving employees more security and stability in their roles.

7. Sheer longevity . Typically, an M&A means strengthened job security for those staffers who remain with the agency post-merger. Employees will likely be relieved that their jobs may no longer be at risk. And a healthy future for the agency means that employees can grow their careers within the business, which is advantageous to those interested in more executive-type or management positions.

8. Morale booster . The newly formed PR agency might provide a different company culture that can deliver positive change for staff and the agency overall.

9. Better fit . In some cases, staff members may feel out of place within their department, and it can cause considerable frustration and stress. There are often opportunities for some team members following an agency sale to shift into a new area of the business, giving them a fresh start with a different team. Remember, companies thrive when staff members are satisfied and happy.

10. Client base growth : If the acquiring agency has a wider net or access to additional industries, it can open new opportunities for staff to work on a more diverse range of projects and gain experience in different avenues.

Change Can Bring with It Opportunities

PR agency sales are significant events that can help a firm grow. Yet, by their very nature, they impact the employees of everyone involved. For this reason, it’s essential to consider the consequences M&A will have on teams before it’s complete. At the end of the day, it takes a top-down approach to ensure that the newly formed workplace is a pleasant, cheerful, productive environment for all – before, during and after the entire process.

Developing a careful, strategic game plan across both entities involved in an agency sale is vital to ensure a smooth transition and motivated team members . And whether your experience is seamless depends on many factors surrounding company culture, chemistry and collaboration, and the blending of best practices of each firm.

Communication is key to ensuring both seller and buyer are content and that the agency teams and clients across both have a positive experience throughout the process – ideally, along with guidance from an experienced facilitator like The Stevens Group.

________________________

ART STEVENS

Art Stevens is managing partner of The Stevens Group, a firm specializing in facilitating mergers and acquisitions in the PR and digital/interactive space.

https://theartstevensgroup.com

TIP FOR THE PR INDUSTRY

Wed, 25 Oct 2023 22:46:02 GMT

Here's a helpful piece of advice from Art Stevens and Rich Jachetti of The Stevens Group. Keeping the PR industry (and buyers & sellers alike) up-to-date and in the know.

ACQUIRING A PR AGENCY? HOW TO BEST VET ONE

Wed, 25 Oct 2023 22:40:37 GMT

Take it from PR industry experts Art Stevens and Rich Jachetti of The Stevens Group as they explain how to best vet a PR agency if you're acquiring one.

ADVANTAGES OF SELLING YOUR PR AGENCY

Wed, 25 Oct 2023 22:01:15 GMT

Here are the advantages of selling your PR agency that everyone in the PR industry needs to know.

Why PR Agency Acquisition Discussions Fall Apart

Tue, 29 Oct 2019 02:19:00 GMT

Bringing two agencies together, whether large or small, is a significant undertaking. The art of acquisition takes not only a high degree of patience and focus but also a special set of skills and a great deal of strategic planning.

In addition, whether or not your agency acquisition experience is seamless depends on crucial aspects surrounding company culture, personnel dynamics and collaboration, as well as the blending of best practices of each firm.

From my experience helping hundreds of agencies through this process for more than 13 years, I’ve realized there are many reasons why PR agency acquisition discussions tend to fall apart.

To avoid this scenario, here are some critical red flags to be aware of during the process:

If the seller doesn’t enter discussions with the right attitude. If the selling agency’s leadership takes an approach of “I’m here to listen, but you really need to sell me,” then err with caution. When a buyer and seller enter acquisition discussions, there should always be a mutual exchange of information and positive attitudes regarding what lies ahead.

If there’s no chemistry between the seller and the buyer. When considering an acquisition, ensure a good cultural match. Strive for positive chemistry among leadership on both sides, a shared business philosophy and compatibility among team members. Both parties should be preconditioned, as well as guided, on how to have an initial conversation. Enlisting the help of an experienced facilitator can help make things go smoothly.

If the seller hasn’t carefully considered what a combination with a larger firm can do for his or her business . When it comes to reaping maximum rewards, it’s vital to realize that an educated seller is a wise seller. Do your due diligence and consider every factor. The decision to relinquish ownership of a firm isn’t one to be made in haste.

If the seller hasn’t considered the reasons he wants to sell his firm. Does the seller wish to exit the business upon its sale? Does he wish to continue working throughout the three to five year earn out? Does he wish to become a senior executive within the buyer’s larger organization? A seller needs to be clear what the reasons for selling are in addition to an acceptable purchase price.

If the seller starts the initial discussion by saying he’s interviewing other buyers as well. This wouldn’t be the ideal way to begin discussions with a desired buyer. Being standoffish sends a negative signal to a buyer who will feel he may have wasted his time meeting with this particular seller. My advice is to be in the moment and get to know the person you’re breaking bread with. Don’t put on airs or play hard to get.

If the seller reveals they don’t run their business to make huge profits. Nothing can turn off a buyer more than a PR firm that’s in it for the wrong reasons or underperforms mid-transaction. It’s important to realize most buyers enter the acquisition process with the hopes that the businesses will perform consistently and will be worth the projected value when the ink dries.

If the seller reveals that he/she wants to leave the business right after the sale. Get clarification from the seller’s leadership that you’ll be able to retain them and continue to tap into their expertise following the acquisition. Proceed cautiously if you uncover any concerns from managers or senior employees that they don’t want to be part of the larger organization following the sale.

If the buyer reveals that they plan to absorb the seller’s firm into their own. It’s always a possibility that a buyer will opt to preserve a practice as a wholly owned, standalone operation. However, in my experience, I can confidently say it’s more likely that a firm is being purchased as a strategic investment because of everything it can bring to the table, ultimately complementing the buyer’s firm. It’s critical during the discussions phase that the seller makes expectations clear to the buyer—both verbally and in writing—to ensure a true “meeting of the minds.”

If the seller says they want equity in the buyer’s firm. The likelihood of a buyer considering selling or making equity part of any deal is nil, except if your discussions are with a private equity firm that wants its sellers to retain skin in the game. But PR agency buyers are reluctant to part with equity in their organizations and prefer to purchase 100 percent of each seller’s equity.

If the buyer says that he/she wants to acquire only 51 percent of the seller’s firm. Most PR agencies in the market for acquisitions prefer to acquire 100 percent of seller agencies. However, private equity firms may prefer acquiring a majority of ownership rather than 100 percent. It’s incumbent upon a seller to weigh the merits of selling 100 percent or partial equity. Each situation needs to be appraised carefully because each has pluses and minuses.

If the seller discloses financial reversals during the previous two years. Let’s say your cultures match perfectly and you’ve planned out how you’ll work together in the coming years, but you’ve based all of these plans on financial results from the previous two to three years and year to date. The seller will have a tough decision to make. Should he sell now and settle for a lower price than he might’ve gotten two years ago? Or should he have faith in what he and the buyer can achieve together in the coming years? It just may be well worth the risk with the right buyer.

Proceed with eyes open (and don’t go it alone!)

It’s important to note that not every acquisition in the PR industry dissolves in the eleventh hour. In fact, the vast majority of transactions proceed relatively seamlessly thanks to positive, collaborative relationships and strategic, careful coordination between buyers, sellers and their trusted advisors.

In today’s competitive environment, it’s critical to strategically prepare for and closely manage the due diligence process in a potential PR agency acquisition. Yet, even with the closest attention to details, issues can arise that will cause discussions to fall apart.

To avoid this scenario, strive to maintain ongoing dialogue between seller and buyer to avoid last-minute lines drawn in the sand. Focus on how a deal will be beneficial to both parties.

The bottom line: if you believe that the future of you and your firm will be beneficial if you’re acquired by the right organization, then engage, engage, engage. You’ll have many options in the marketplace to connect with the right buyer.

This article was originally published on O’Dwyer’s Inside News .

The post Why PR Agency Acquisition Discussions Fall Apart first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Are PR Agency Valuations Worth the Time and Money?

Tue, 15 Oct 2019 01:26:00 GMT

Let’s say you’re in the market for a new home. What do you do? You hire a broker to determine the current marketplace.

You give the broker information such as where you’d like to live, what type of house you want, what amenities need to be within driving distance and what price range you can afford. The broker goes through his database and identifies a house that meets your criteria. The house is listed for $300,000. That’s the value that the seller and his broker put on the house.

When you see the house, you’re excited. It’s exactly what you want. But you don’t think it’s worth $300,000. So you offer $250,000. The two brokers negotiate to see if there’s some middle ground, and when a phone call comes saying that the seller will accept $275,000, you’re elated. You have your dream house.

The same premise applies to selling a PR firm. However, our profession has a process used to help determine the appropriate value of a PR agency. It’s called “valuation.”

A process that CPAs usually carry out, valuation examines a long list of tangibles, as well as intangibles. It includes a detailed analysis of past and present financials, profitability and client stability. It also evaluates the caliber of key employees, as well as that magic ingredient known as goodwill.

Let’s say the founder of a $3 million consumer product firm finds out that his firm is worth $3.5 million through a formal process; that’s what he should get for the firm if he sells it. The PR agency owner will receive a bill from the CPA for a fee of $7,000 to $12,000 for conducting the valuation.

So just how “valuable” is this written valuation? This same PR agency owner decides to put his firm on the market. He deliberates whether he should sell to his own employees or to an outside organization, so he decides to test the waters.

He goes to three of his key employees and tells them that his agency has been valued at $3.5 million, and that he’d like to continue the legacy of the firm by selling it to them.

They are flattered, but after talking about it among themselves, they realize that they don’t have the means to shell out that kind of money. So they offer the owner $2 million to be paid over 20 years.

The agency owner politely declines their counteroffer. After all, he’s got the official valuation document in his pocket.

Then, he turns to the marketplace. He meets several potential buyers and displays the valuation document. He determines that there shouldn’t be much in the way of negotiations because the value of his firm has been cast in stone.

One buyer offers him $2.8 million to be paid over three years.

“But you don’t understand,” the seller says to the prospective buyer. “I have a valuation and according to it, this firm is worth $3.5 million.”

The buyer responds, “No, you don’t understand. I’ve done my own evaluation of your firm, and my advisers and I don’t think it is worth anywhere near $3.5 million. We believe it’s worth $2.8 million.”

The seller declines the offer and has a conversation with another buyer who says, “I believe your firm is worth $4 million and I’m ready to do this deal.” Does the seller then say, “No, you don’t understand. This firm is valued at $3.5 million, and I simply can’t accept your offer of $4 million”?

No! The seller will simply toss the valuation into the dustbin of the restaurant where he’s celebrating the sale of his firm and forget all about.

A cost-effective valuation

My premise is simple. Don’t bother with a valuation. It’s not worth the expense. Just use the rule of thumb of how PR agency acquisitions are usually done. It’s a lot cheaper. In fact, it doesn’t cost anything at all.

If your agency has a net fee income of $3 million and a 15-to-20 percent profit after the owner pulls out all the perks, then the agency is worth about one times that net fee income — or $3 million. Or, it’s worth five times your EBITDA; the prevailing totals are usually the same.

The only “valuation” you need to have is common sense. If your agency does around $3 million, then the base value will be around $3 million. If it has demonstrated rapid growth, and you are certain that the agency will double its size in three years, then the earn-out will take into account this rapid growth, and you will do considerably better than $3 million.

If your agency is stumbling at around $3 million, having made in excess of $4 million a year in net fee income the previous two years, then it may be valued at less than $3 million. But if the anticipated synergies take place between the seller and the buyer during the next few years and result in the seller experiencing a massive turnaround in net fee income and profits, then the seller could pocket more than $3 million after all.

You don’t need an expensive crystal ball, tealeaf reader or valuation to give you this information. It’s already there for you.

And I’ll put it to you another way. I’ve been doing mergers and acquisitions for 15 years now, and I’ve never had a buyer ask to see a valuation. The buyer will always use his own criteria to make a judgment as to what a PR agency is worth to him.

And if a seller shakes hands with a buyer to move a deal forward, then the marketplace will have done the valuation for you.

The post Are PR Agency Valuations Worth the Time and Money? first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

RUDER FINN ACQUIRES THE SPI GROUP

Wed, 09 Oct 2019 21:16:00 GMT

RUDER FINN has acquired THE SPI GROUP

M&A FIRM THE STEVENS GROUP BROKERED AND FACILITATED THE TRANSACTION

The Stevens Group is one of the leading acquisition facilitators in the public relations and digital marketing agency categories.

The post RUDER FINN ACQUIRES THE SPI GROUP first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Seven Ways to Turn Off a Prospective Seller

Mon, 03 Jun 2019 17:00:00 GMT

Want to know the quickest way to abruptly end a discussion about a PR agency sale just after the conversation starts?

I’ve invested a lot of time and effort throughout my career in the public relations industry working with and mentoring both would-be buyers (and sellers) on how to approach an initial agency sales meeting. And I can’t even begin to describe some of the eye-opening scenarios I’ve encountered over the years.

Take a seller client of mine who once reported back on his first in-person meeting with the head of a prospective buyer company. The buyer had instantly launched into how he’d like to immediately change the focus and approach of the seller’s company. During this meeting, the buyer also waxed on about his own success, and the fact that my client should be chomping at the bit to become part of his firm. The biggest issue: not once during this meeting did the buyer ask the seller about his own company.

Despite preparation for an initial meeting between buyer and seller, some would-be purchasers tend to shoot themselves in the foot by expressing themselves in ways that can instantly turn sellers off. In my opinion, such buyers blow a potential opportunity of a lifetime given how they present themselves and what they say.

Here’s what not to do when trying to impress a prospective seller during an initial meeting:

Don’t ask the CEO of the firm you’ve brought to the table to discuss acquiring his firm anything about his business . A positive first meeting is vital to executing a successful deal, and simply extolling the virtues of your organization is a major turnoff to any prospective seller. Your job should be to put a seller at ease and communicate the strategic value of an acquisition.

Don’t turn a prospective seller off by being narcissistic. Make your first meeting a two-way street. Ultimately, it’s a buyer’s duty to take a deep dive into a seller’s firm and vice versa. Before the first meeting, do your homework and have an understanding of the seller as both a business owner and as someone with whom you can discuss family or any other topics/passions they may enjoy touching on during your initial get-together.

Don’t spend the first meeting telling the potential seller how fortunate he or she is to be considered as a prospective acquisition . “You’re so lucky that we are considering purchasing your firm,” isn’t going to lure a selling agency. Every seller is an entrepreneur and feels that he or she has built a good organization with blood, sweat and tears. Entrepreneurs take pride in their investment of time, money and effort, and they won’t accept the notion of someone swooping in and suggesting that all they have done is meaningless unless they sync up with this “extraordinary” buyer.

Don’t dismiss the concept of a strategic approach. When a buyer and seller meet for the first time, it must be a scenario involving reciprocal exchanging of information, with the most critical element being the chemistry between the two entities.

Don’t tell the selling agency how you plan to change the way they do business because “you can do it better.” I’ve seen this too many times: the buyer comes in and declares “this is what we’re going to do,” instantly rearranging staff positions and duties, changing the firm’s name and so on. The buyer believes that altering every aspect across the board is a better approach, often without discussing the plans with the seller.

I don’t recommend that any buyer tell a seller that “my way is better.” Keep in mind, the seller has worked hard to create a dedicated team, so the worst thing you can do is demotivate them and clean house. If staff on the seller’s side senses their lives will be made worse as a result of this acquisition, they’ll likely walk and start job hunting elsewhere.

Don’t be coy about where the funding is coming from. The seller is always interested in hearing from a buyer that the financing of a proposed transaction is secure and that the money is there. If a buyer hesitates on this topic and says “don’t worry,” then a seller won’t be that confident about moving forward.

The first meeting is the premise for a business discussion, and there are numerous questions a buyer should be prepared to answer at this time. All sellers want to ensure that anything they do is risk-free — or as much risk-free as possible — that funding is there and they won’t have to worry about how the earn out will be handled in the coming years.

Don’t demand an agency-name change off the bat. A would-be buyer should understand that the selling agency takes pride in the name of his or her firm. If you march in and tell them that you want to integrate immediately, swallow their firm wholly, they’ll be turned off. Simply absorbing their agency into your operation is the wrong approach.

There are many reasons why a seller prefers to hold onto its name for a reasonable period of time. All deals are predicated on performance, and you’re giving a prospective seller a tremendous handicap by suggesting so many big changes in such a short period. Be cognizant — and supportive — of this fear when meeting for the first time.

Don’t outline the formula you use to make acquisitions without fully committing yourself. One way to make a bad impression is to be underprepared for a first meeting by not bringing along a strong game plan. Your formula and strategy should demonstrate your overall vision without appearing to be vague — and it should emphasize specific areas where you see synergies between the two agencies.

Your goal for an initial meeting should be to impress the seller, keep them interested in learning more and show your full commitment to your proposal.

Don’t focus entirely on your firm; be a good listener instead . When meeting a potential seller for the first time face-to-face, your goal isn’t immediately to sign on the dotted line. Instead, you should work to get to know the selling agency, make them feel comfortable about selling their business to you, and most importantly, listen carefully and respectfully to their concerns and questions.

Show the seller you care by simply listening. You don’t want to come across as an aggressive, hungry acquirer who wants to take over their company, but rather a supportive, caring partner that can bring mutual success to both entities.

First impressions matter

The best initial meetings I’ve attended between would-be sellers and buyers are those where the two parties are almost tripping over each other’s words. They share hope and a common vision for what each firm can do for the other.

The purpose of an acquisition is to combine forces with an organization that can help a seller grow and prosper; it’s a positive blending of both capabilities and talents.

How buyers express themselves at a first meeting will ultimately define the relationship moving forward, and whether or not there will be further discussions. So, remember, first impressions really do matter.

This article was originally published on odwyerpr.com .

The post Seven Ways to Turn Off a Prospective Seller first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Press Release: F|W|V Acquires 50% Stake in AMP3

Fri, 07 Dec 2018 14:31:00 GMT

French|West|Vaughan is acquiring a 50 percent stake in New York-based fashion, beauty and lifestyle shop AMP3 . The two agencies will operate together as AMP3 PR in the New York market.

AMP3 PR co-founders Dion and Alyson Roy will continue to direct the operation of the firm. FWV executive vice president and principal Natalie Best will work to integrate AMP3 into the FWV portfolio of agencies, which includes FWV Fetching; RGAA, its Hispanic market offering; and Prix Productions, the company’s longform feature and documentary film division.

Rick French and Alyson and Dion Roy

“Our investment in AMP3 is a new way for FWV to approach the NYC market,” French told O’Dwyer’s. “We are a large midsize agency with multiple practice areas, whereas Dion and Alyson have built a strong reputation in high-end lifestyle marketing and fashion, which really takes us back to our own roots in New York when our office there was primarily focused on the same categories.”FWV’s New York staff will combine with AMP3 PR and its staff in new offices at 210 W. 29 ^th Street.

The Stevens Group’s Art Stevens and Rich Jachetti brought the parties together and assisted in the negotiations.

FWV reported net fees of $25.2M in 2017 and AMP3 had $500K, according to O’Dwyer’s annual ranking .

This article was originally published on O’DwyerPR.com .

The post Press Release: F|W|V Acquires 50% Stake in AMP3 first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Interview: Organic Growth – Hit The Road

Tue, 27 Nov 2018 13:57:00 GMT

PR & Digital/Interactive Agency Acquisition Market on Fire in 2018!

Listen to Interview with Art Stevens & Rich Jachetti

2018 is a record year for PR agency and digital/active agency acquisitions. It’s been like the Wild West. It’s hard to get out of Acquisition City what with all the great offers and all. Acquisition is the new norm. Sellers and buyers depend on it to grow and prosper. Organic growth, hit the road. Take a ride with Art Stevens , managing partner and Rich Jachetti , senior partner of The Stevens Group to get insights into why the acquisition route is now the prevailing way for buyers to achieve critical mass, synergies and complementary niches. Be prepared to emerge from this insider’s report with greater clarity on why acquisitions are indeed the new norm.

The post Interview: Organic Growth – Hit The Road first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Webcast: Current Politics and Public Relations

Thu, 25 Oct 2018 14:20:00 GMT

It would be a challenge even for the most learned of historians to recall a time in our history when the political parties in the U.S. have been more polarized. It also would not be considered as hyperbolic to say that the image of the media as a reliable source of information, seekers of the truth and a critical check on the actions of our lawmakers in Washington as being under attack and as such the victims of an erosion in the esteem in which the best of them — think Walter Cronkite — were once held. Given these hard facts, what impact has this erosion in the confidence of the public’s perception of the media had on the practice of public relations?

Click here to login and view How the Current Political Environment Is Affecting the Practice of Public Relations

The post Webcast: Current Politics and Public Relations first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

How to Get the Best Out of An Attorney During the PR Agency Acquisition Process

Fri, 19 Oct 2018 12:38:00 GMT

The decision to sell or buy a public relations agency is significant. It carries with it an abundant opportunity for those savvier individuals and often unseen risks for the inexperienced.

With this in mind, the value of enlisting the support of the right attorney – someone who truly understands the public relations landscape inside and out – cannot be understated.

Unfortunately, some people assume that a “lawyer is a lawyer;” so, they believe any type of attorney will be able to deliver whatever legal services they need. While in theory, this is true (as a lawyer is licensed to practice law), the continually changing laws today are so vast that it is impossible for one attorney to offer legal services across every area of law effectively.

If you rush the M&A process or pick the family lawyer just because it’s easy, it will likely result in a failed attempt. I’ve experienced this all-too-common scenario – where an attorney representing a seller does not understand the various nuances of the PR agency space – too many times over the years.

Find Someone Who Really Knows How PR Agency Deals Are ‘Done’

Obviously, a lawyer that concentrates mostly on estate planning, property closings or other non-business-related areas is not an ideal fit for a PR agency CEO considering a sale.

The primary role of an attorney during the PR agency acquisition process is to advise the seller on any legal issues that may arise related to the deal’s agreement as well as drafting associated language on the documents. Examples of such language might describe in specific details anything that pertains to the CEO and staff of the selling firm, such as the manner in which the selling agency’s CEO can be terminated; the agreement reached on how long the selling agency’s CEO will remain with the firm; the earnout; or, even employee benefits.

During the early stages of a PR agency acquisition, the buyer’s attorney is commonly wrapped up in conducting due diligence and putting together initial drafts of the documents. Throughout the process, this paperwork is revised and negotiated to address any issues and reflect the developing deal between both parties. In the final stages, both parties’ lawyers spend time finalizing documents, ensuring that everyone is satisfied and collecting signatures.

Keep in mind, you don’t want a lawyer who might start changing the terms of a deal half-way through the process, but preferably one whose primary goal is to protect the rights of the selling agency’s CEO and staff members.

Here’s my advice to anyone thinking of selling their PR agency – or is at least in the discussion phase:

Don’t be afraid to shop around and ask direct questions about a lawyer’s experience in the PR industry. Get referrals from industry peers and pick someone who has specific expertise in M&A contracts, the PR space and its legal environment.

Otherwise, for example, the person you choose risks being taken advantage of by the buying agency’s counsel. Even worse, an inexperienced lawyer might insist on provisions that have no bearing, or he or she could neglect critical elements that should be included in the deal.

Your M&A lawyer – especially one with an understanding of how various laws impact PR agencies – should be well-versed in finance and tax laws to ensure they structure deals correctly. You also need an attorney who understands that his or her role is not to change the terms of a proposed sales agreement, but to ensure the terms agreed upon are spelled out in appropriate legalese.

Before you sign on the dotted line, you also need to make sure you are hiring an attorney that not only has experience but also works in a style that matches well with your personality. A seasoned M&A lawyer experienced in PR agency sales should be a good diplomat – not an impediment to the sales process – and will charge you fairly and reasonably.

Your attorney should be willing to take the time to educate you and your team about the legal environment of your PR agency if you aren’t already familiar with the process. They should also be able to explain what the law says and tell you how it impacts the way you operate moving forward so that you can detect potential issues well in advance.

To reinforce my earlier point about hiring someone with experience, it’s also important to avoid anyone that you believe may raise issues during the negotiation process that aren’t relevant or necessary, or who could argue every single point in a purchase agreement – it can eat up valuable time and be costly.

Some Final Thoughts

The colossal decision to sell your PR firm cannot be one you make on the spur of the moment. You must consider all aspects carefully, and it’s always strongly recommended to begin the process of ensuring your agency is ready to sell well in advance of your desired sale date.

Enlisting the help of the right attorney, ideally along with guidance from an experienced facilitator like The Stevens Group, can help make things go smoothly, protect the seller and the work with the buyer’s attorney, and get things done collaboratively and the right way the first time around.

This article was originally published on CommPro.biz .

The post How to Get the Best Out of An Attorney During the PR Agency Acquisition Process first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The Stevens Group Facilitates Ruder Finn – RLA Collective Acquisition

Wed, 08 Aug 2018 21:18:00 GMT

Ruder Finn has acquired RLA Collective , a marketing firm that specializes in over-the counter health and wellness – a move aimed at bolstering the agency’s marketing, digital and analytics capabilities. Introductions were made by The Stevens Group which also assisted in the negotiations.

RLA Collective specializes in end-to end product marketing including research, content development and brand engagement strategies such as social marketing, micro-influencers, geo-targeted retail campaigns and digital marketing.

RLA founder and CEO Robin Russo and president and partner Alyson O’Mahoney will serve as co-managing directors, part of an 11-person team that will be joining Ruder Finn through the merger.

Ruder Finn CEO Kathy Bloomgarden said the acquisition is in keeping with Ruder Finn’s “journey without end” to be an agency more heavily reliant on data and analytics –and use those capabilities to help companies grow and adapt to new business models.

The Stevens Group is one of the leading acquisition facilitators in the public relations and digital marketing agency category. Headed by former PR agency owner Art Stevens, The Stevens Group has already announced the consummation of three other acquisitions in 2018 in which it introduced the parties and helped facilitate the transactions.

The post The Stevens Group Facilitates Ruder Finn – RLA Collective Acquisition first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Risk Aversion

Tue, 17 Jul 2018 01:12:00 GMT

The Hidden Culprit That Can Prevent CEOs From Making Prudent M&A Decisions

Life undeniably is a series of calculated risks. In fact, most of us take risks every day without realizing it. Almost everything we decide – from getting married, buying a car, having children and choosing a career – has some margin of risk.

There is also risk involved when you run a business. For the PR agency owner, founder or CEO, the story is no different.

A good analogy can be seen in the case of buying stock. When you invest money with a financial advisor, they ask you about your risk barometer. Do you want to buy and sell more aggressively, which could lead to generating more risk but also suddenly be more rewarding? Or, do you want to be extra cautious and act more conservatively?

The same scenario applies to buying or selling a PR agency. What is tolerable risk for a seller and a buyer, or their risk barometer?

If you are considering venturing down the road of a PR firm sale, the question of risk will inevitably come up in conversation. Sure, there’s risk in most everything, but agency owners considering M&A can absolutely minimize any degree of risk by taking into consideration a number of different aspects.

Risk is a Mindset

With any M&A strategy, it is essential to take sufficient time to think through every element of the sale opportunity. A key to reducing risk is to be as aggressive as possible during the “homework” phase to avert any potential issues that may arise along the way.

Start by conducting thorough research well in advance of a potential deal to ensure that both parties can bring positive synergies, a good cultural fit and total collaboration to the table. The journey also involves assurance and confidence that the seller’s agency has a solid track record going into the M&A process.

Another way to strive for reassurance – and minimal risk – is for the seller to spend quality time with a prospective buyer. Carve out time to meet with a number of the interested firm’s internal team members, partners and clients, and always be open and honest to impact the question of risk positively.

Keep in mind, you want to ensure that cultural collaboration is achievable – that everyone is comfortable and compatible with each other – and that the chances of the dynamic changing significantly post-transaction are minimal.

Here are a few additional rules of thumb that can apply to both sellers and buyers as you work through the aspects of tolerable risk:

Defy the Odds of Failure

The concept of risk is an often overlooked element in the thinking and mindset of today’s PR agency sellers and buyers. Yet, risk is necessary, and risk can be useful in M&A.

The takeaway is that the type of risk should be tolerable and not so overwhelming that you can’t sleep at night. Instead, I suggest to agency owners that they learn how to make risk work in a positive way moving forward, ideally along with guidance from an experienced facilitator like The Stevens Group.

By equipping yourself with the necessary information, doing your homework, conducting proper research, and meeting all the right people, you can minimize any potentially overwhelming or negative scenarios that could arise during an agency sale.

So, don’t avoid the process of being acquired simply because you think it’s too risky. The truth is that you could potentially come out better on the other side – both personally and financially. So see what the risks are, address them, deal with them, and make a goal to overcome them.

This article was originally published on O’Dwyer’s Inside News .

The post Risk Aversion first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Webcast: Lessons Learned After Being Acquired

Fri, 22 Jun 2018 14:15:00 GMT

Life doesn’t stop once a PR agency has been acquired. Its CEO and entire staff become integrated into the buyer’s organization and life becomes quite different. Whether it’s a good or bad life depends upon many factors — culture, chemistry, synergy as well as the blending of best practices of seller and buyer.

Learn from someone whose firm has been acquired and who can share that experience with PR agency CEOs who are thinking about selling at some point. Grace Leong’s firm Hunter PR was acquired by MDC Partners several years ago. Learn from Grace firsthand how sellers can make being acquired work. Grace is one of the most respected agency heads in the industry. Here words of wisdom will teach you how and what to do to make being acquired exciting, stimulating, motivating and financially rewarding.

Click here to login and view Lessons Learned After Being Acquired

The post Webcast: Lessons Learned After Being Acquired first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Webcast: Five Key Factors in PR Agency Acquisitions

Tue, 15 May 2018 14:07:00 GMT

Will they want my PR firm as is? In this instance we’re not talking about a new business presentation. This is a question virtually every PR agency owner asks herself or himself when considering the possibility of selling their agency. Will a buyer, any buyer, be interested in what we have to offer now? In this second in a 6-part series of webcasts sponsored by The Stevens Group and brought to you by CommPRO , Peter Finn , Founding Managing Partner of Finn Partners, shares his insights with agency leadership on what he looks for in a seller agency before he either decides to take a pass, or to start taking the necessary steps to integrate the seller’s firm into his firm. Further, Peter shares what are in his opinion as one of the most methodical buyers of PR agencies in the US, the five key factors that any PR agency buyer is most likely to look for in an acquisition candidate.

Click here to login and view The Five Key Factors PR Agency Acquirers Look For in an Acquisition Candidate

The post Webcast: Five Key Factors in PR Agency Acquisitions first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The Next Chapter: Consider Your Post-Sale Plans

Wed, 25 Apr 2018 16:51:00 GMT

Are you planning to sell your agency sometime soon? Have you thought about where you see yourself four years after the ink dries?

With any public relations agency merger or acquisition, there are numerous questions you must ask yourself before signing on the dotted line, including getting smart about your future options.

For example, are there any distinct landing spots with a clear path to advancement for you in the combined entity? You also may wonder how the merger will affect your agency’s overall position in the industry and its reputation, as well as its financial standing.

When I sold my agency after many years in the business, I had a very clear vision about what I wanted to do moving forward: I wanted to give something back to the industry that had been so good to me by providing consulting work and facilitating agency acquisitions. My goal was to remain in the PR space, yet serve it in a new, more pertinent capacity.

Keep your eye on the prize

As someone who’s worked closely with more than 100 PR agencies over the last 12 years, I encourage any agency owner to carve out time for some serious reflection about what they want to do with the rest of their life following a sale. I believe it is essential to figure out what is really important to you in life, including why you are working so hard in the first place.

I can personally attest that owning and operating a PR agency can be all consuming. And being thrust into the world outside of your agency life following a sale can often lead to culture shock and disorientation if you are unprepared.

Yes, there’s life after agency business

Developing a plan that tackles how you want to monetize your business — and factors in your future ambitions — can yield significant dividends, both financially and personally. Of course, the options and combinations vary from one person to the next.

For instance, if you’re hoping to make a solid break from the industry, the scenario will obviously require a different exit plan strategy versus someone who simply wants to “slow down” for a few years, gently bow out of the business and remain fairly active in the PR industry.

I’ve met many CEOs who knew from day one of the sales process that they wanted to get out “while the getting’s good.” The majority of these owners started the retirement process over the course of the two to three years “burnout” phase following the sale of their agency.

Other executives have different plans they hope to pursue after selling their agency. For example, one head of a firm I sold a few years ago wanted to start a consumer product business with her daughter. Another owner said she’d always dreamed of moving to Israel from New York and eventually followed her path there.

There’s also another category of agency sellers: those executives that are in the prime of their lives and want to join forces with an organization that will help them enhance their career, giving them the opportunity to make a quantum leap into a more integral role — on a higher level — within the newly formed entity.

Finally, there’s the scenario that I can relate to the most: that it can get very lonely at the top. Some agency owners pursue a merger because they just don’t want to work alone anymore (assuming they own 100 percent of the firm).

This circumstance is precisely what happened in my experience as an agency owner. After realizing that I didn’t have anyone within my firm on an equal level to make decisions with, I started investigating options to merge with another agency. The rest is history.

Brainstorm your options

There are several things I urge you to consider as you think about your post-sale plans. For starters, learn how to say “no.” Just because you want to step back from the business eventually doesn’t mean that your appetite to create and contribute to the world of PR has disappeared altogether. If anything, your passions may accelerate once you have time to rest and regroup.

In many cases, after an agency sale, industry peers will line up to share new opportunities and partnership ideas, including board of director positions, industry organizations and more.

I also recommend paying it forward. After taking the time you need to rediscover your personal and professional desires, you may find fulfillment serving as an industry advisor or mentor, or dedicating volunteer hours to support peers or non-profit organizations.

For those of you who may be considering retirement, as someone who created a “second” career more than eight years ago — and still loving it — I urge you to think twice. Some people believe that retirement will allow them the luxury to sit back and smell the roses. However, after some time has passed, I believe those roses don’t want to be smelled. In other words, it’s important to realize that retirement may not ultimately resolve all of your quality of life issues.

As an alternative, I suggest either starting a second career — as I did — or think about re-engaging and dedicating your time to related activities, with a goal of contributing to the perpetuity of the industry.

Go with the flow, but go for what you want

If you’re in the process of selling your PR agency, you should start to lay the groundwork for your future life now. Be sure to factor in enough time to allow yourself to slow down in stages so that you can try your hand at different things.

Remember, some people have very concrete reasons as to why they’re selling their agency, especially because they have a solid post-sale game plan in place. However, others don’t always have all of the answers.

In my case, after my PR agency was acquired and before I started formally consulting, agency owners almost immediately began reaching out to me for tips and advice. They shared their stories, asked me questions and appreciated my advice. It was at that point that I realized I had something to contribute.

The bottom line: by exploring and pursuing your true interests during any transition period or agency sale, you will allow yourself time to figure out your true passions, helping you to ultimately rediscover the greater world around you and your agency.

This article was originally published on O’Dwyer’s Inside News .

The post The Next Chapter: Consider Your Post-Sale Plans first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Press Release: TSG Facilitates Acquisition of Blicksilver and Associates

Mon, 23 Apr 2018 17:27:00 GMT

Lambert, Edwards & Associates Acquires Owen Blicksilver PR
Creates Top-10 Investor Relations, M&A Communications Firm Nationally

Grand Rapids-based Lambert, Edwards & Assocs. today announced the acquisition of financial PR powerhouse Owen Blicksilver PR to move into the New York market.

The Stevens Group engineered the deal.

Blicksilver is noted for its private equity, M&A, real estate, crisis, bankruptcy, litigation support and B2B marketing savvy.

The deal creates an entity with 65 staffers and more than 150 clients. The new Lambert-Blicksilver New York office is located at 450 Seventh Avenue in Midtown.

Blicksilver retains its branding and now becomes a Lambert, Edwards & Associates company. Founder Owen Blicksilver has inked a multi-year contract and will serve as president of the Blicksilver unit.

“We’ve been fighting above our weight class for years as a Michigan-based investor relations and financial communications firm, and when the opportunity arose to add a great team and stellar client base in New York, the biggest media and capital markets city in the world, we jumped at it,” Lambert founder and CEO Jeffrey Lambert told O’Dwyer’s. “The combination of Blicksilver’s financial comms. and crisis depth with our full-service PR, IR and integrated marketing offering made this a perfect match, and we’re already integrating the new team, working together on clients, and thinking about our next acquisition in the next 12-18 months.”

LE&A reported $7.6M in total net fee income for 2017 and ranked as O’Dwyer’s No. 13 financial services firm with $2.6M.

The post Press Release: TSG Facilitates Acquisition of Blicksilver and Associates first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Webcast: Building Next Generation Agency

Wed, 28 Mar 2018 16:50:00 GMT

Bob Feldman joined Art Stevens for the first in a series of webcasts that focused on the subject of PR and digital marketing agency Mergers & Acquisitions. This series is sponsored by The Stevens Group and brought to you by CommPro.biz . In this brief exchange between Bob and Art they cover subjects that in this quickly-changing and converging environment are a “MUST KNOW” for any PR agency CEO with a keen — or even a passing — interest in either selling their firm, or acquiring a PR and/or digital marketing agency as a growth strategy.

Click here to login and view the Building the Next Generation Agency through M&A

The post Webcast: Building Next Generation Agency first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

M&A Channel on CommPro.biz

Wed, 07 Mar 2018 17:12:00 GMT

CommPro.biz, one of the leading newsletters covering public relations, digital/interactive and marketing, has announced the creation of a new CHANNEL focusing on mergers and acquisitions. The Stevens Group, a leading M & A facilitator, will sponsor the new CommPro.biz M&A CHANNEL and provide content. This new channel will literally cover the waterfront on issues critical to the burgeoning world of mergers and acquisitions. Its goal will be to provide agency leadership with in-depth information and insights on this topic using a multi-media platform, including monthly webcasts featuring some of the most respected professionals in the world of PR and digital marketing, management and marketing consulting and mergers and acquisitions.

Fay Shapiro, CEO of CommPro.biz said: “We have long regarded the subject of agency mergers and acquisitions to be timely and useful, especially given the way the agency world continues to converge and integrate. We chose to work with The Stevens Group on this channel because of the firm’s longstanding reputation in the M & A world. Art Stevens, managing partner and Rich Jachetti, senior partner will be actively involved in this new Channel. Their role is to provide CommPro.biz with the latest thinking and insights on the increasingly important subject of mergers and acquisitions.”

New MERGERS & ACQUISITIONS Channel on CommPro

The post M&A Channel on CommPro.biz first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The Many Perils of a D.I.Y. Sale

Fri, 19 Jan 2018 18:59:00 GMT

Some things were inherently meant to be “Do-It-Yourself” projects, like repainting your spare bedroom, planting a new bed of hydrangeas, or updating the latest operating system software on your mobile device. However, the sale of your PR firm is definitely not one of those things.

With the recent arrival of 2018, we find that the U.S. economy is strong, business growth is on the upswing, and the financial markets are continuing their unprecedented record-setting pace. In fact, as I write this, the bellwether Dow Jones Industrial Average has climbed above the 25,000 level for the first time in its 121-year history. All signs are pointing to a record year for merger & acquisition activity – including within the public relations industry.

With new buyers constantly emerging, potential sellers of PR firms should be especially sensitive right now to what they don’t know about acquisition protocol. Understanding the many twists and turns of the negotiation process is an essential prerequisite to a successful transaction, and a rash decision to “go it alone” can result in costly mishaps. Just as many major world seaports require all merchant ships to have a local harbor pilot at the helm for added safety, having a qualified, trusted advisor on board during the sale of your PR firm can truly help to avoid many potential disasters.

What’s It Worth?

For starters, the proper valuation of a PR practice doesn’t involve any rocket science. However, it does involve the application of a certain degree of common sense combined with a comprehensive understanding of the current marketplace. Just as many FSBO (For Sale By Owner) homeowners tend to overprice their offerings due to sheer naiveté, sellers of PR firms sometimes overvalue their practices and then find themselves wondering why they’re having difficulty attracting interested buyers. In contrast, because buyers of PR firms tend to be experienced acquirers who are seeking bargains, without objective counsel to assist in a firm’s valuation, a seller might be induced to hastily agree to a below-market purchase price.

The mechanics of a business sale can sometimes be necessarily complex, and having a trusted advisor on your side can help to ensure that all scenarios are properly evaluated in order to achieve the most favorable outcome. For example, an inexperienced seller may fixate on the potential personal income generated by a sale, rather than opting to negotiate a deal based on capital gains treatment. And even when electing for a long-term capital gains treatment, a portion of future contingent payments made as part of an earnout agreement may be taxable to the seller in later years as ordinary income. With recently-enacted federal tax law changes due to impact corporate and individual returns beginning with the 2018 tax year, it has never been more important to consider all financial implications of your firm’s sale before inking a deal.

Parsing The Fine Print

As a PR firm owner, you’ve read many contracts, and perhaps you’ve even authored a few. But if you’ve never been a party to a business sale agreement, you may be in for some unpleasant surprises. Take, for example, the imposition by a buyer of a “management fee” which automatically reduces the seller’s profit margin. Or a buried clause that banishes all use of the seller’s name at the buyer’s firm. Or a non-compete clause that bars you from starting another PR firm for any number of years following the sale’s closing date. In all business dealings, some fine print is unavoidable, but an experienced advisor can help you to evaluate which terms and conditions are de rigueur and which ones are simply onerous.

PR firm owners electing to become employed by the buyer after selling their firms – who constitute the vast majority of sellers these days – face a separate set of conundrums. Such deals invariably involve employment agreements that define the terms and conditions under which the seller can earn a full earnout. These agreements can occasionally contain pitfalls camouflaged in contorted legalese, including clauses that preserve a buyer’s right to terminate the seller’s employment at any time without cause, that tie payouts to unrealistic financial performance goals, or that force a seller to surrender the right to hire, retain or fire personnel.

Having thoroughly reviewed numerous employment agreements over the years, I can personally attest without hesitation that the devil is in the detail. These documents are binding contracts prepared by the buyer’s attorney that become very difficult – if not impossible – to undo once executed. Therefore, it’s absolutely essential for you to the have the agreement reviewed by an objective third party who understands all of its implications.

Mitigating Risks With Sound Counsel

If you’ve been contemplating the sale of your PR firm in 2018 or beyond, take a moment to consider all that could possibly go wrong should you opt to handle the negotiations yourself. You may yearn to impress your friends with your best Frank Sinatra impression by crooning: “I did it My Way.” But take note that in penning this famous song for Sinatra, Paul Anka conspicuously included the line: “Regrets, I’ve had a few.”

Don’t set yourself up to be on the short end of the stick by going it alone. There’s simply too much at stake. And it’s never too early to begin reaping the benefits of having sage counsel by your side throughout the entire process.

By Art Stevens, Managing Partner, The Stevens Group
Originally Published on CommPro.biz .

The post The Many Perils of a D.I.Y. Sale first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

When ‘Cold Feet Syndrome’ Puts an Agency Sale on Ice

Fri, 19 Jan 2018 16:57:00 GMT

With the winter season upon us, there’s perhaps no better time to examine the mysterious phenomenon of what we refer to as “Cold Feet Syndrome,” a sometimes puzzling set of circumstances that cause a surprising number of PR agency CEOs to back out of a previously-agreed-to sale of their firm to a buyer agency at the eleventh hour.

As experienced advisors in mergers and acquisitions within the public relations and digital marketing industries for more than a decade now, we’ve repeatedly witnessed CEOs of seller firms spend months in negotiation with a buyer agency, eventually agreeing in principle to the terms of the deal, and then suddenly having a change of heart at the last minute for reasons that leave the buyer, my partner Art Stevens and me shaking our heads in disbelief. And no effort by us or the buyer to make things right can affect the outcome of the deal.

Here are just two examples from our annals:

After several months of good-faith negotiations between buyer and seller, the buyer firm’s attorney prepared a requisite contract containing the standard at-will employment provision that the seller could be dismissed “without cause” at any time. The buyer didn’t catch the clause, and because the document was hastily sent directly by the buyer to the seller — effectively bypassing The Stevens Group — we were precluded from objecting to what literally turned out to be the deal’s “death sentence.” Upon receiving the document, the seller became irate and called the buyer to complain. The buyer apologized and immediately offered to have the contract revised, but it was too late: The seller felt duped, lost trust in the seller and walked away from the deal.

After extended negotiations between buyer and seller, it was mutually understood that upon consummation of the transaction, the seller would become an employee of the buyer’s firm, reporting directly to the person at the buyer agency with whom the seller had been dealing almost exclusively up to that point. However, just prior to the sale’s closing, the buyer’s finance director interposed, requesting clarification on several matters uncovered during due diligence. He also informed the seller that the seller’s firm would be subject to ongoing financial performance reviews. The seller was deeply offended at what was actually the buying firm’s standard operating procedure for all acquisitions, and chose to walk away entirely from an excellent deal, rather than simply talk to her boss-to-be, whom she respected and trusted.

Rational and irrational thinking

Why would otherwise savvy businesspeople abruptly terminate a deal they had been working on with a buyer for months over apparently simple misunderstandings without even affording the buyer an opportunity to make amends? After all, lovers of Francis Ford Coppola’s “The Godfather” are more than aware of the films’ oft-used adage: “It’s not personal. It’s strictly business.”

To understand more about the thought processes behind a seller’s perplexing actions in these situations, I spoke with David Popple, PhD, President and Founder of Psynet Group, an international consultancy that advises clients on issues involving human resources and corporate psychology. His two decades of work in the areas of critical and strategic thinking have frequently been applied to the mediation of workplace disputes at the executive level.

“This ‘cold feet syndrome’ is essentially a three-step process,” explained Dr. Popple. “First, the seller rationally evaluates the merits of the deal. Then something causes the seller to experience an intensely negative emotional reaction, spurring irrational thought. Lastly, the seller rationalizes that emotional reaction by withdrawing from the situation entirely.”

Suddenly, the seller has gotten a case of cold feet, and the buyer may never even receive a proper explanation for it. Rather, the buyer’s e-mails don’t receive replies. Repeated phone calls are not returned.

‘Mini-death’ fear factor

The average owner of a small- to-mid-sized PR firm has been running their built-from-scratch company for several years by the time they seriously consider selling it. By that point, according to Dr. Popple, the business has essentially become a physical extension of its owner. “The prospect of surrendering the entity to an outside buyer induces trepidation,” he said.

“It’s almost like a personal ‘mini-death,’” added Dr. Popple. “The seller becomes convinced that should the deal happen, they’re going to lose a part of themselves.”

The seller may also feel they’ll resent having to take orders from a new boss or they’ll experience anxiety at seeing their clients handled differently within the buyer’s firm. Hence, the decision not to complete the transaction becomes an avoidance behavior for the seller — even despite the lures of healthy sale proceeds, generous earn-out bonuses and an improved work-life balance.

And while the business world is full of failed mergers, cold feet syndrome may be more common in the PR industry than in other business segments.

“PR firm owners are a unique breed,” said Dr. Popple. “These are highly entrepreneurial people who spend every day carefully managing their clients’ images and branding. Therefore, it’s no surprise that the seller of a PR firm may undergo their own personal identity crisis, especially when they’re on the verge of potentially giving up the reins of their firm to someone else.”

Don’t go it alone

Not every merger or acquisition in the PR industry falls apart at the last minute. The vast majority of transactions proceed relatively smoothly due to strong relationships and close coordination between buyers, sellers, and their respective financial and legal advisors. However, if one of the parties is going to get cold feet at the last minute, it’s almost always going to be the seller, not the buyer. Simply knowing that this phenomenon exists can help sellers to better manage the emotional rollercoaster that invariably precedes the sale of their PR firm.

Emotions can occasionally get the best of us, even when we know that we shouldn’t let these factors taint our decision-making.

Remember: “It’s not personal. It’s strictly business.” That’s why it’s critical for a PR firm owner considering the sale of their practice to have objective counsel at their side throughout the entire sales process.

Article originally published on ODWYERPR.COM .

The post When ‘Cold Feet Syndrome’ Puts an Agency Sale on Ice first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

TSG Helps Nourie Group Launch Healthcare Communications Practice

Mon, 31 Oct 2016 14:44:00 GMT

The post TSG Helps Nourie Group Launch Healthcare Communications Practice first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Podcast: Selling Your PR Firm?

Thu, 25 Aug 2016 12:30:00 GMT

TSG Managing Partner Art Stevens was interviewed on a podcast by Rodger Roeser, chairman of the PR Agency Owners Association as part of a special LinkedIn broadcast. Roeser conducts periodic audio interviews of leading figures in the PR agency world. The interview was disseminated to members of this association. The subject discussed is everything you ever wanted to know about selling your agency. Art shares his insights and experience in the world of PR agency mergers and acquisitions and provides advice on how agency owners can best prepare for such an event. This is must listening.

The post Podcast: Selling Your PR Firm? first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

A Strong Number Two

Fri, 22 Jul 2016 13:22:00 GMT

The Stevens Group has launched a periodic one-question survey on matters of vital interest to PR agency CEO’s. Two hundred PR agency CEO’s agreed to become a permanent sounding board for these periodic surveys. The initial question was:

The response:

yes: 73%

no: 27%

I lost the bet. My staff and I conducted an office pool on what each of us thought the result would be. I guessed the “yeses” would be considerably lower than they were. I thought that many more PR agency owners didn’t have a solid number two person in place. Boy, was I wrong. Knowing how important a number two person is to a prospective acquirer I applaud the good business sense of this vast majority of PR agency CEO’s.

Kudos to PR agency owners who had the foresight to identify and put in place a strong number two. But fifty lashes with a wet noodle to the 23% who haven’t. What are you waiting for?

The post A Strong Number Two first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Big Apple Awards 2016

Tue, 21 Jun 2016 14:48:00 GMT

Ketchum and Michelin took home top honors from PRSA-New York’s Big Apple Awards June 2 for the “Beyond the Driving Test” campaign.

The winning effort, which drew a large audience online, aimed to educate new drivers about tire safety.

L-R: Joe Cohen, Grace Leong and Art Stevens.

Other top winners included Butler Associates and the Uniformed Firefighters Assn. of Greater New York for a campaign marketing the restoration of disability benefits for city firefighters. Coyne PR and Just Born Quality Confections/PEEPS won for brst use of research, measurement and evaluation for a campaign highlighting how PEEPS candy moved beyond Easter into other holidays.

The chapter honored Hunter PR CEO and partner Grace Leong with the John W. Hill award for lifetime achievement in PR, while KIND Healthy Snacks senior VP of comms. Joe Cohen took home the Philip Dorf for leadership and mentorship. The Stevens Group managing partner Art Stevens was given the president’s award for ethical conduct and service to the chapter and PRSA national.

The event drew about 250 to the Mandarin Oriental New York. “WPIX 11 Morning News” reporter Kirstin Cole presented awards in 44 categories.

PRSA-NY also rolled two new awards. MasterCard was the first recipient of the Outstanding PR Leadership Award, which recognizes a corporate contribution to PR. And the “15 Under 35” award goes to “the most inspired and inspiring young talent” in PR in the New York metro area.

Full list of winners is available at prsany.org .

This article was originally published in its entirety on O’Dwyer’s Inside News .

The post Big Apple Awards 2016 first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Are ‘The New Players’ Changing PR’s M&A Game?

Mon, 20 Jun 2016 15:01:00 GMT

This article was originally published on The Holmes Report by Aarti Shah .

It’s worth noting the diversity of buyers in these deals: two independent PR agencies, one holding group, one healthcare services company and one private equity firm. This represents the new landscape for PR mergers and acquisitions — a highly-diversified field of potential buyers means new and more flexible ways for deals to be structured.

“We don’t see conditions possibly getting better than they are right now,” says Greg Smith, managing director at AdMedia Partners — the firm that advised on several industry deals, including Olson’s sale to management consultancy ICF International. “If a firm has the financial profile to consider sale, now is the time. The upcoming [US presidential] election has introduced some uncertainty and there’s a question — will the music stop?”

Firms with deep social media and digital capabilities have the most options when it comes to buyers: independent PR agencies , private equity firms , the holding groups , talent agencies , management consultancies , retail marketers, pharma service providers — in fact, the list of potential buyers for PR/digital agencies seems nearly inexhaustible these days.

“There’s a great chance to get competition with different bidders coming at it with different valuations metrics and deal structures,” Smith adds. “We’ve seen corporate communications attracting increasing attention from private equity and non-holding company strategics because earned media and social are out of the control of corporate clients — so PR’s seat at the table has ascended and there’s more interest and value to CMOs.”

The majority of PR acquisitions in 2015 were driven by independent firms, per our own analysis. Of the 61 industry acquisitions we covered in 2015, 35 (57%) were by independent PR firms. While profitability ultimately reigns supreme when it comes to deals, independents have tinkered with the acquisition formula established by the larger holding groups. At the most basic level, this typically involves a 25% to 35% down payment, followed by a 3-5 year earnout that’s typically four to six times EBITDA (earnings before interest, taxes, depreciation and amortization) — but of course, the multiplier can be higher or lower depending on various factors.

One independent PR agency head told us that when holding groups come to him with a buyout formula, rather than being viewed as an agency with a distinctive culture and service offerings, he feels he’s being looked at as “a set of numbers.”

M&A advisor Rick Gould, who consulted on Shift’s recent sale to National PR and Horn’s sale to Finn Partner s, says some independents don’t put as much profitability pressure on the selling firm and are more likely to incentivize top-line growth during the earnout than a holding group.

“Some buyers prefer a top-line model that’s based on net revenues because they want to say to the seller ‘Go out there and bring in business — and let us worry about the bottom line,’ ” Gould says. For instance, if the seller is doing 20% profitability, the expectation is they’ll keep doing that while also growing the top-line.

Art Stevens managing partner of the Stevens Group (and a former partner of Gould’s until they parted ways several years ago) — takes this thinking even further and says independent PR agency buyers shouldn’t overlook acquisition targets simply because their profitability isn’t up to the industry standard.

“Some very good firms aren’t that profitable — they have good clients and good staff but without that 15% margin,” Stevens says. “Do you abandon even considering a firm with great clients and talent?”

Stevens maintains the profitability objective can be accomplished via efficiencies in combining the two firms: consolidated backend functions, shared office space and eliminating redundant positions. And because some agency owners dislike managing profitability, he says, the top-line model makes it more likely the sellers will stick around beyond the earnout.

“More and more buyers want sellers that are looking for entrant strategy rather than an exit,” Stevens says. “They don’t want owners who walk away after the earnout. They want a partner who can help them generate business.”

We also consulted with Davis & Gilbert, a law firm with expertise in agency M&A, and were told that there’s really no one-size. And yes, the independents tend to put more emphasis on revenue growth, but ultimately that new business needs to be profitable.

But it also depends on the size of the firm that’s being bought. For instance, when buying $10m+ firms bringing in profitable business is central to the earnout, meanwhile firms larger than $25m should have owners savvy enough to manage profitability, so the buyers aren’t looking to micromanage that. It’s typically the firms under $5m where the owners are looking to step away from managing their P&Ls that the buyers are most likely to incentivize primarily around the top-line.

Changing What Integration Means

Edelman, the world’s largest PR agency, is likely the most watched independent, acquiring PR agencies. Like the holding companies, Edelman tends to expect the agencies it buys to operate somewhat independently (at least early on) rather than being fully digested into its own operations. Last year, Edelman bought Germany’s ergo Kommunikation , Dubai’s Dabo & Co , Colombia’s Position .

Meanwhile, Peter Finn, founding partner of Finn Partners , bought several firms in the last few years — most recently the Horn Group . He tends to eschew firms where the owners are looking for a “quick exit” and instead seeks out “people who want to keep running their firms but like what Finn Partners can offer them in doing that.”

Finn’s targets tend to be under $10m and he suspects most independents are looking at that range. “Integration is easier,” he says. “I don’t want to create silos within partners, I’m looking for people who want to be part of one team.”

That’s the sticking point — earnouts. The way earnouts are structured, they typically don’t reward collaboration. But Finn says as an independent, he makes it a point to structure deals so that sellers are incentivized for contributing to any part of the agency.

“Every individual running any sort of business has to worry about the bottomline — but if I bring them into Finn Partners and their clients want to use some of our offices and I don’t include that revenue in the deal, then why should they do it?” Finn says. “I want to motivate people joining us to sell all of our service areas, our expertise, our geographic reach.”

Likewise, in January two executives deflected from PMK*BNC to start Kovert Creative with majority investment from talent conglomerate WME-IMG. This group also bought Catalyst in 2013.

“Every deal is different but we’re seeing that companies want to be part of culture and leverage that,” says Ed Horne, WME-IMG’s head of strategy and activation. “We take a collaborative approach and create an environment where people are incentivized to contribute to the overall company.”

When agencies are sold via auctions, the buyer typically pays cash so there’s no earnout involved. When consulting and technology services company ICF International bought Olson for $295m in 2014, the transaction was in cash. ICF CEO Sudhakar Kesavan says this ultimately made Olson’s integration easier.

“Earnouts don’t incentive integration,” Kesavan says. “You’re saying you’re not sure about the acquisition so you put the risk on the owner of the business. In nearly all of the acquisitions we’ve done, we’ve bought the firm outright because we did our due diligence.”

Of course, it’s not to say the management isn’t financially incentivized at all. That’s done through stocks (ICF is a publicly-traded company) which Kesavan says has gone up 30% since the Olson acquisition. Another key difference from the holding group model is what integration ultimately means.

“We don’t have another agency competing against Olson — they are complementary not competitive with the rest of our offerings,” says Kesavan. ICF now houses management consulting, technology platforms and implementation, public affairs and digital marketing within its group.

So what is integration like without an earnout? Not that different in many ways. After the financials were integrated, “we didn’t change how Olson functioned or worked. We appointed a few people to do triage on the opportunities coming in and determine whether we should make it a joint effort.” For instance, ICF works with a West Coast-based utility that recently faced a major crisis and Olson was brought in to setup social media centers for the client.

“It was a humongous opportunity that came from integration,” he says. “We don’t want to transform Olson’s culture and make it like ours. We want them because they are unique and different.”

The risks for an earnout are well-known in an industry where plenty of acquisitions have ultimately failed. Art Stevens outlined some of these in a blog post “ Debating the Future of Earnouts .” He writes:

The problem with traditional earnouts is that they’re all about making high profits for both the buyer and the seller, and less about the quality of service. If a seller wants to maximize profits during the three or so years of an earnout, then he or she is incentivized to cut costs and staff — often at the seller’s peril.

The seller might also “come to the painful conclusion that the chemistry and synergies expected aren’t there and earn-outs aren’t achieved as a result,” Stevens says. “The seller’s business may erode somewhat because of various economic factors and the earn-out would be less…A buyer is chosen because that buyer should help increase these numbers as part of the synergies shared. But beware the buyer that hasn’t a clue as to how to help its acquisitions grow.”

Even so, nearly all deals where the buyer is another agency — independent or not — there’s an earnout because when it comes to professional services, it’s considered the most effective way to ensure the seller has skin in the game, so to speak.

The Private Equity Option

There’s a somewhat new player emerging on the M&A front — private equity. W2O Group recently took investment from a private equity firm , meanwhile, the $150m financial PR powerhouse Sard Verbinnen is in talks to sell a 40% stake to its private equity client Golden Gate Capital. Also, last year, WPP joined forces with US-based Providence Equity Partners to buy Chime Communications — parent company of public relations firm Good Relations as well as advertising and sporting marketing agencies — for £374m.

“I didn’t want to stop taking risks because we needed more cash flow,” says W2O CEO Jim Weiss. “And my wife and I couldn’t keep funding the business.”

AdMedia’s Smith says in most cases private equity offers owners a one-year earnout but it’s the rollover equity that keeps the principals around until the next financial transaction. He says it was private equity investment from KRG Capital that made it possible for Olson to acquire firms Dig Communications and PulsePoint — two buys that ultimately made Olson an attractive acquisition target for ICF.

“If we’re selling a good-sized independent, we’ll go to private equity,” AdMedia’s Smith says. “It’s a different conceptual choice than selling to WPP or Omnicom, it allows for more control and they provide board-level counsel to find attractive acquisition targets.”

For Weiss, the upside was “they aren’t trying to run your business. [Our investors Mountaingate Capital] get our business, they believe in our business. They want to build something.”

Another upside, says M&A advisor Gould, is private equity tends to offer a 40% to 50% downpayment on the current valuation of the firm. “But they want lots of financial information that sellers aren’t accustomed to providing,” he says. “They are in it for their ROI and have high expectations.”

But ultimately the unconventional buyers are giving today’s PR firms other selling options that will change — not only the way PR firms are bought – but how they ultimately operate. An industry where PR firms are part of, not just strategic holding companies, but management consultancies, talent agencies, technology companies and beyond, has dramatic implications for PR’s role as a marketing discipline.

“It means we’re not following the typical agency playbook,” adds Weiss.

The post Are ‘The New Players’ Changing PR’s M&A Game? first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

What people are saying!

Tue, 31 May 2016 15:44:00 GMT

In one of his many appearances throughout the country to address groups of public relations agency principals, Art Stevens addressed members of the Croft Society recently at their annual meeting in Key West, Florida. The Croft Society is a network of close to thirty independent PR firms located in major markets.

This is what three attendees said about Art and his contribution to their knowledge:

“I am currently working with Art Stevens and couldn’t be happier. His current insight of the market is amazing and quite accurate . I recently had him speak to the Croft Society, a national group of independent owners, and he was engaging, thought provoking and inspiring. What a gift to our industry.”
– Phil Morabito, CEO , Pierpont Communications

“Art has offered his advice and experience to long-standing national affiliations of independent agencies who meet on a regular basis to share best business practices. His practical viewpoint and reputation for candor provide an objective view of the market.”
– Pete Webb, Principal, Webb Strategic Communications

“If you’re thinking of buying or selling a PR firm, his book (When and How – Selling Your Public Relations Firm) is a must read. If you’re ready to buy or sell, Art Stevens is a must meet.”
– Steve Haweeli, President, WordHampton Public Relations

The post What people are saying! first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Planning to Sell Your Firm?

Tue, 26 Apr 2016 01:52:00 GMT

IF YOU’RE PLANNING TO SELL YOUR FIRM THIS MAY BE THE BEST OFFER YOU RECEIVE

We offered Art Stevens’ book “When and How – Selling Your Public Relations Firm” free of charge to any PR agency principal or owner who emailed us with a request. To date we have shipped almost 200 free copies.

We’re overwhelmed by our industry’s response. We’ve received dozens of emails telling us how much value was derived from the book. The emails complimented us on our advice and analysis of the acquisition marketplace. The book has helped steer PR agency principals in the right direction in one of the most important decisions of their lives.

Our book is the definitive primer on everything you need to know about the acquisition process. Its “self sell test” enables you to consider all the options available to you.

Here are some typical comments from PR agency owners who have benefited from the book: “Essential reading for anyone contemplating selling an agency – or buying one.”

“An excellent primer for all PR agency owners who are considering selling their firms.”

“Art has long relationships built on trust with most senior executives in the PR agency world. His advice is always objective and valuable.”

We’re so pleased that we’ve provided guidance to hundreds of PR agency owners that we’d like to extend our offer to provide complimentary copies to agency principals who email us. We will extend this offer to May 31.

If you don’t already have a copy of the book just drop us an email .
And you’ll get a free copy. That’s a deal you ought to take.

Hundreds of complimentary copies shipped to PR agency owners around the globe.

The post Planning to Sell Your Firm? first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

TSG Names Deborah Radman Senior Associate

Wed, 23 Mar 2016 00:03:00 GMT

THE STEVENS GROUP NAMES DEBORAH RADMAN SENIOR ASSOCIATE

March 23, 2016 – The Stevens Group (TSG) has named Deborah Radman Senior Associate. The Stevens Group is headed by Managing Partner Art Stevens and specializes in facilitating mergers and acquisitions in the PR agency industry.

Radman is a 40-year veteran of the public relations business. She worked extensively with national and international public relations firms when she owned her own agency in Denver, Brown Radman Wolper. She subsequently sold that firm to a large New York-based PR/IR firm, KCSA Worldwide, and became that organization’s Chief Operating Officer.

This began a nearly 20-year stint as a senior executive at prominent public relations agencies. This included Stanton Communications where she started and built up the Washington D.C. firm’s New York office. From there she was recruited to head Cramer-Krasselt Public Relations, a $15 million firm with over 100 staff members and the PR division of Chicago-based Cramer-Krasselt, the oldest advertising agency in the U.S. with $1 billion-plus in revenues.

Since 2010, Radman has operated Radman Communications, a national consultancy providing vital outsourced senior communications strategist services to several top public relations firms, including Ketchum and MWW. In early 2014, she returned home to Denver and was named public relations director and chief communications officer for History Colorado, the Colorado State Historical Society and historic preservation agency.

“Deborah’s experience with PR and ad agencies across the U.S. brings an indispensable range of knowledge and experience to our firm, not to mention the relationships she has cultivated. She embraces the fundamental philosophy that excellence in practicing PR is, by far, the backbone of any good agency. But knowing how to run a firm as a business and make money doing it is where she excels. This furthers our firm’s mission to provide business management consulting services to agencies and match qualified buyers with firms seeking to successfully sell their business,” Stevens said.

The Stevens Group represents a wide range of sellers and buyers in the public relations and digital/interactive agency space. It also provides consulting services to agency owners on such subjects as agency operations, profitability, time management and key employee retention.
For more information about The Stevens Group, go to www.theartstevensgroup.com
email Art at art@artstevensgroup.com or call (732) 748-8583.

The post TSG Names Deborah Radman Senior Associate first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Combine PR Savvy with Biz Sense to Make Profits

Mon, 08 Feb 2016 17:31:00 GMT

A good friend (I’ll call him Dave) owned a public relations agency for about 8 years and on the surface it appeared as if his agency was doing fine. Or so I thought.

One day he confided in me. “I love having my own business,” he said. “But I can’t seem to make the money I was hoping to make.” He could show credible, incremental year-to-year revenue
growth. But his firm’s profitability, the bottom line, was in the proverbial toilet.

As senior partner at The Stevens Group for the past couple of years, I’ve gotten to know many PR agency owners in the $500K-to-$5M revenue range. While some are making millions even on relatively minimal fee income, others like Dave are having a really hard time making ends meet. While Dave’s firm was great at doing PR, paradoxically there was just something missing, or stunted, in his management style when it came to turning big time PR talent into big buck profits for him and the firm. This paradigm just seems to be an immutable fact of life for some people who run a professional service business.

To be honest I’m not entirely sure what distinguishes one group of owner from the other. Some CEOs have figured out how to make millions, while others with comparable PR talent lay awake nights worrying about making payroll. Maybe it’s in a helix either present, or missing, in an owner’s money-making DNA . I can’t make sense of it. When I talk to most agency owners, including Dave, they seem to have a firm grasp of the basic tenets of how to properly manage, and profit from, the high-end services they provide.

In Dave’s case it wasn’t for lack of trying. He even bit the bullet and hired a consultant – for hundreds of dollars an hour — who specializes in turning small businesses around and helping agency owners manage their way to $greener$ pastures.

This consultant framed everything in terms of goals. Goal # 1: Stop over-servicing clients. Goal # 2: Cut overhead without compromising client service. (That was tough for Dave to hear since he was very fond of every member of his staff). Goal # 3: Give up the quixotic quest to have every client love you. She begged him to get off the “love treadmill,” and start delegating more of the day-to-day service responsibilities to his team. Goal # 4: she told him to get his you- know-what out there and start bringing in more business. Goal # 5: Stop over-servicing clients (repeated here for emphasis). Goal # 6, and the most percipient of all her advice to him in my opinion: She strongly suggested he c onsider merging with a bigger, better managed PR firm with considerably more resources whose owners could teach him a thing or two about how to run a PR firm more profitably.

At first the idea of reporting to someone else just didn’t quite resonate well with him. He had been his own boss for just a little shy of a decade and he liked seeing his name on the door. Working for someone else seemed too big an ego lump for him swallow. The idea of selling his business was anathema. Further, although mistakenly as it turned out, he was convinced no one would want to buy his firm. He thought his firm’s profitability would preclude a buyer from taking him seriously. He was doing about approximately $800K a year in fee income. A credible number to be sure. Pancake EBITDA was the Achilles Heel he thought would hurt his chances of getting a fair price for his firm.

Long story short, Dave finally decided to throw caution – and restless nights — to the wind and explore the possibility of finding a buyer for his firm.

Turned out The Stevens Group knew a buyer who we thought might be just the right fit for his firm. So Dave and the prospective buyer (who will remain nameless) met for lunch. The meeting went very well. (In these initial meetings I’ve learned that chemistry matters most).

The buyer liked Dave’s style, his affable nature and work ethic, his acumen for the art and science of PR, and he liked the work Dave’s firm had been doing for their clients. The question of fee income came up. The buyer never mentioned profitability.

Lo and behold two months later Dave sold his firm to the buyer he had just met. It’s been two years since the sale and Dave and his new owner are now one of the hottest tag teams in town, surprising even the naysayers and enjoying triple-digit growth.

I find in many cases there continues to be one hard lesson for some PR agency owners to learn — and it’s a lesson every owner like Dave should to take to heart. And the lesson is this: Excellence at the practice of PR is by far and away the backbone of any good agency. But knowing how to leverage those PR skills, manage people wisely and never, ever take your eye off the bottom line is the only way an agency owner can ever hope to realize his or her full financial potential. Being good at PR is only one part of the equation. Knowing how to run the firm as a business and make lots of money doing it is the other.

An excerpt of this article was originally published on O’Dwyer’s Inside News .

The post Combine PR Savvy with Biz Sense to Make Profits first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The First Meeting Between a PR Agency Seller and Buyer

Tue, 05 Jan 2016 17:48:00 GMT

I had the good fortune of recently assembling and moderating a panel discussion on behalf of PRSA’s New York Chapter on the subject of “Why Should I Hire You?” The panel consisted of three agency CEOs: Edelman’s Richard Edelman, Finn Partners’ Peter Finn and Peppercomm’s Ed Moed.

The panel focused on the changing nature of PR agency jobs and how technology and agency client goals affect the current skillset required by agency account people. The panel also focused on the agency-employee candidate interview process. In the past, an agency representative seeking to add to the staff would essentially read from a standard set of questions during the interview process:

These questions aren’t really asked anymore. The interview process has more to do with the two parties connecting on both a visceral and social level. The discussions today focus more on outside interests, such as favorite movies, hobbies, opinions, attitudes and lifestyles. In fact, agencies welcome multiple questions on the part of the job candidate so that the process is no longer a one-way street.

I mention all this because the initial interview process between an agency principal seeking to sell his firm and a prospective buyer has become very similar to the initial interview between an agency job candidate and an agency manager. Although each participant will describe his or her business, vision and reasons for entering into such discussions, the conversations will quickly drift to the personal and social.

The reason for this is that a seller and buyer want to begin the process of making sure that they will get along after the signatures are affixed to purchase agreements. They want to be sure that they are compatible and comfortable with each other should a transaction be consummated.

In my travels through the world of PR agency mergers and acquisitions, I have always stressed the importance of establishing a positive working relationship between sellers and buyers. An acquisition is more than just about the money; it’s about establishing an environment for the seller and his or her employees that will empower and not diminish.

I always cite case studies where sellers got what they wanted out of a deal financially and then dreaded coming to work every day during the three-year earn-out period. Why? Because they began to hate the people they now worked for and rued the day they decided to accept the terms of the buyer.

This is why the initial “interview” process is so vital. It is the first step of a romance. There will be ample time to go into case studies and the like. But if there’s initial stress or an underlying current of discomfort, the chances are that the discussions won’t get very far.

The power of listening

I will never forget several instances where it became clear at the outset that the chemistry between a prospective seller and buyer could never work. In one instance, a buyer went on and on about his vast ranch, horses, personal wealth and penchant for total control over his business. The seller listened for a respectable while and finally said: “Would you mind if I leave now? I have no further interest in taking this discussion any further.” He got up and left. The buyer and I were left sitting with our jaws in our laps.

Another time, a seller tried so hard to impress the prospective buyer that he wound up carrying out the longest run-on sentence in business lunch history. He talked about everything under the sun and didn’t allow the buyer to say anything at all. The seller left all his food on the plate, as he had no time to chew his food, lest he miss a beat.

After the lunch, the buyer expressed deep disappointment. He was very interested in the seller’s firm, but realized that he could never work comfortably with him. So end of discussions.

If you’re a prospective seller, don’t shoot yourself in the foot during the course of the initial conversation. Don’t underestimate its importance either. It’s an interview: The buyer is sizing you up and determining if he wants to go to the next step. If you as a seller and are good at getting new business, then you’ve learned the true secret of impressing a new business prospect — listening.

The same rule of thumb applies to that very first meeting with a buyer. Listen, and then listen some more. Don’t hog the spotlight. Make that first discussion an equal opportunity situation. Make it light, tension-free and comfortable. If you do this, I can readily envision multiple additional meetings with a buyer and a transaction in your future.

As originally published on PRSA Public Relations Tactics .

The post The First Meeting Between a PR Agency Seller and Buyer first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Press Release: Art Stevens’ New Book on Selling a Public Relations Firm Now Available

Thu, 12 Nov 2015 03:24:00 GMT

New Book Focuses on what PR Agency Owners Need to Know About Selling Their Businesses

PR Agency Owners to be Offered Book Free of Charge

The book consists of blogs Stevens has written for the past several years for PRSA’s online publication, Tactics. The book covers every facet of selling a PR agency from the moment an agency is created until the day the owner considers future options.

According to Stevens the book will be given free of charge to any U.S. pr agency owner who requests it.

“As a former PR agency founder and owner myself, I understand the mindset of agency owners. I have personally lived and breathed every issue that comes up in the running of a PR agency business,” Stevens said.

“Plus I acquired four firms during my tenure as CEO of LobsenzStevens and went through the experience of selling my firm as well.”

Stevens’ firm was acquired by Publicis in 2000 and he went on to manage the New York office. Since 2003 he has been facilitating mergers and acquisitions in addition to consulting with PR agency owners on running their businesses.

“A PR agency is a significant asset in the life of an agency owner and must be treated accordingly, ” Stevens said. “PR firms need more guidance in making one of the most important decisions in their business life — how to capitalize on the blood, sweat and tears agency owners put into starting a business and seeing it reach a certain level of success. I have personally facilitated the sale of PR firms with revenues from $300,000 a year up to $40 million. My job has been to make good matches. How this is done is the basis for this book.”

The book features such subjects as what you need to know about getting acquired, an agency owner’s self “sell” test, today’s acquisition landscape and why a buyer’s vision must align with a seller’s. The book is endorsed by such PR agency principals as Richard Edelman (Edelman), Peter Finn (Finn Partners), Jim Weiss (W2O Group), Florence Quinn (Quinn and Company), Andy Hardie-Brown (Allison and Partners), Harold Burson (Burson Marsteller) and Steve Cody (Peppercomm).

Weiss, who is the founder and CEO of W2O Group, currently the fourth largest independent PR agency in the country, said: “Art gave me my start as an intern, which put me on the path to starting and growing my own independent firm. His wisdom and insights are invaluable to any owner or leader looking to optimize their firm for maximum return — either in a sale or going and growing it alone.”

Richard Edelman said: “Art has long relationships built on trust with most senior executives in the PR agency world. His advice is always objective and valuable.”

The book will be available in a quality paperback version as well as through Amazon .

The post Press Release: Art Stevens’ New Book on Selling a Public Relations Firm Now Available first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Why Should I Hire You

Thu, 05 Nov 2015 19:01:00 GMT

PRSA-NY Announcement

December 8th Event Features Panel of Top Agency Principals

Join us for “So Why Should I Hire You?” on December 8th from 5:30-8:00 PM at Anchin, Block & Anchin . Three agency leaders will chronicle how agencies have changed and what agencies need – and require – of account people today. They will describe what PR professionals in agencies need to know about the current criteria for employment consideration. In short, they will describe what the bar is for employment in their agencies and how you can prepare for this challenge.

Moderator:
The panel will be moderated by Art Stevens, a former top twenty independent PR agency owner himself and now managing partner of The Stevens Group , one of the country’s leading PR agency mergers and acquisitions facilitators. Art invited the three panelists to join the discussion. The three agency leaders will chronicle how agencies have changed………

Panelists:
Richard Edelman – President & Chief Executive Officer, Edelman
Peter Finn – CEO, Finn Partners
Ed Moed – Co-founder and CEO of Peppercomm

Date & Time
Tuesday, December 8, 2015
5:30 to 8:00 pm

Location
Anchin, Block & Anchin
1375 Broadway (Btw 37th & 38th Streets)
23rd Floor
New York, NY 10018

The post Why Should I Hire You first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

What’s in a Name?

Wed, 28 Oct 2015 01:05:00 GMT

Here’s a somewhat familiar story. The names here have been changed to prevent awkwardness.

Rhett Butler Public Relations, a New York consumer product PR agency earning about $3 million in net fee revenues, was acquired by the Millard Fillmore Group headquartered in San Francisco. Fillmore is an agency on the rise and nets $30 million with a core client group in most niches except for consumer products.

The Fillmore Group decided to go the acquisition route. Its vision was to establish a foothold in New York, where it wasn’t currently represented, and to get into the consumer product category to extend its service bandwidth. It identified the Butler firm as an opportunity to accomplish both goals.

Through a facilitator like me (in fact, it may have been me) the principals of the two firms met a number of times before both parties felt that the situation was right.

Terms were drawn up, negotiations ensued and an agreement was reached. Butler was going to be the New York platform for Fillmore and both parties were ecstatic. The synergies were apparent, the culture was compatible and the chemistry between the principals was excellent. The acquiring firm submitted legal documents, lawyers played their role in dotting the Is and crossing the Ts and the deal was done. Employees of both organizations were briefed on the exciting future this transaction would play in their lives. Announcements were sent to clients and subsequently the media.

Brand presence

All elements of the deal were included in the signed documents — except one. And that was what the name of the acquired firm would be. It was never discussed if Butler would continue to be called Rhett Butler Public Relations, or Butler/Fillmore or simply Fillmore.

For some reason, the name of the acquired firm wasn’t even raised in the initial or final discussions. All other components of the deal were: the earn-out, the role of the acquired firm’s principals and the reporting structure. The subject of the name was left hanging and needed to be addressed.

The Butler firm remained in the office space it had been in for the previous 10 years. Fillmore’s CEO picked up the phone to call his counterpart at Butler once the deal was about two weeks done.

“Hi, Rhett. I hope all is going well,” said Fillmore. “Are your employees and clients as psyched about your joining our organization as we are?”

“Yes, indeed, Millard,” said Butler. “Everyone is on board. It’s a win-win situation for everyone.”

“I’m so glad to hear that, Rhett. Now that the deal is done, I think it’s time to cover the next subject in our evolution. Since the Fillmore brand is so well known, I think we should now brand your firm as Fillmore. I’d like to see your name changed by the end of the month.”

There was a long pause. Finally, Butler said, “But, Millard, the Butler brand is also well known. We’ve established a strong presence in the consumer product category, and if we abandoned our name it could cost us business.”

“Nonsense,” said Fillmore. “If your brand is changed to Fillmore you’ll get more business, not less.”

And the conversation ended without any decision having been made. But Fillmore continued to insist and Butler had no choice. In 30 days, the name of the decades-old Butler firm was changed to Fillmore. And the Butler firm suffered as a result.

If you were to have a private and confidential conversation with Rhett Butler about this turn of events, here’s what he would say:

“We were in effect forced to change our name. It hadn’t occurred to me that this would be part of the deal. Once acquired, I no longer had a vote. Our employees were very disheartened to learn that the Butler name was gone. And our clients began to look more closely at possible conflicts of interest with those of the parent company.”

“And for some reason our usual over-the-transom prospects began to shrink. They thought that once the Butler name was no longer on our letterhead that we had gone out of business. It was a disaster. If I had to do it over again, I would never agree to abandon a brand name that was well known in the marketplace.”

Combined names

If you’re contemplating selling your firm, then you should insist on your name being carried forward at least through the end of the earn-out period. If your firm earns well under $1 million in net fee income and you have fewer than ten clients, a name change may not be that vital. But if your firm has at least $2 million in net fee income, has a dozen clients or more and a staff of 20, then the name of the firm is just as important an asset as how much cash you have in the bank. The ideal situation would be to pair your name with the buyer’s. The combined name could do more for your ongoing reputation as the name of your firm before the transaction.

Most buyers wouldn’t agree to have its acquisitions retain their own names unless the buyers are huge holding companies. It’s one thing for a Ketchum or FleishmanHillard to keep their names as wholly owned units of Omnicom. But it’s not likely that a PR agency the size of Rhett Butler PR would hang on to its original name. The more common likelihood is that its name would be combined with the buyer: Butler/Fillmore.

The most important thing to remember is that the subject of what an acquired agency should be named is no less important than such other fundamentals as purchase price, earn-out criteria, degree of autonomy and synergy. Your ongoing net fee revenues could depend on it.

As originally published on PRSA Public Relations Tactics .

The post What’s in a Name? first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The Stevens Group Names Rich Jachetti Senior Partner

Wed, 07 Oct 2015 14:50:00 GMT

THE STEVENS GROUP NAMES
RICH JACHETTI SENIOR PARTNER

Oct.7, 2015 – The Stevens Group (TSG) has named Rich Jachetti Senior Partner. The Stevens Group is headed by Managing Partner Art Stevens and specializes in facilitating mergers and acquisitions in the PR agency industry.

Jachetti joined the firm as Senior Associate in January 2015.
He owned his own public relations agency for eight years and in 1987 merged his firm with LobsenzStevens. For nearly a decade, Jachetti served as an executive vice president and group manager of L-S where he worked side-by-side with agency founder and CEO Art Stevens on, among other things, the selection and due diligence of L-S’s subsequent multiple PR agency acquisitions.

“Rich has brought an indispensable range of knowledge and experience to our firm. He has made an immeasurable impact on the number, size, scope and geographic distribution of the firm’s network of buyer and seller PR agencies,” Stevens said.

Before joining TSG, Jachetti founded Emotionmapping LLC, an integrated marketing communications company based in Westchester, New York that specialized in providing advertising, PR, sales promotion and digital marketing consultation and services.

In 1996, Jachetti joined one of the country’s leading, and award-winning sales promotion agencies, DVC Worldwide, and served for eight years as part of that agency’s team of senior executives responsible for new business development and the expansion of business among the firm’s existing client base.

For more information about The Stevens Group, go to www.theartstevensgroup.com
email Art at art@artstevensgroup.com or call (732) 748-8583.

The post The Stevens Group Names Rich Jachetti Senior Partner first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Two well-known technology public relations firms – Feintuch Communications and Roher Public Relations – have merged.

Wed, 23 Sep 2015 12:38:00 GMT

The Stevens Group made the introductions, facilitated the discussions and assisted in the negotiations. This merger marks the sixth The Stevens Group transaction this year.

Feintuch Communications, a New York agency, was founded in 2009 by tech industry veteran and former journalist Henry Feintuch. The agency specializes in technology, financial services/fintech, cleantech/clean energy, adtech/media and professional services. Mr. Feintuch is a past chair of the technology section of the Public Relations Society of America (PRSA) and the immediate past president of PRSA-NY. He also serves as vice chair of the Public Relations World Alliance, a premier network of independent PR firms.

Roher Public Relations is an award-winning firm best known in electronics and other high tech markets, including consumer electronics, AV, telecom and IT. The firm, managed by Richard S. Roher, APR, was founded in New York in 1968 by the late Daniel S. Roher.

Mr. Roher will become a managing partner in Feintuch Communications and will serve as president of the Roher PR Group within the combined firm.

The post Two well-known technology public relations firms – Feintuch Communications and Roher Public Relations – have merged. first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Press Release: The Stevens Group Announces Its Fifth Transaction of the Year

Mon, 07 Sep 2015 20:39:00 GMT

Steinreich Communications Group , Inc. an international public relations agency headquartered in New Jersey has expanded its presence in the travel and hospitality sector with the acquisition of Montgomery Communications , one of the most respected firms in the space. Montgomery Communications represents leading airlines, hospitality brands, national tourism boards and destinations throughout the world.

The Stevens Group made the introduction, facilitated the discussions and assisted in the negotiations.

Virginia Montgomery, founder and president of Montgomery Communications, has been named vice president and group director of the travel and tourism group of Steinreich.

Steinreich Communications , founded in 2003, represents some of the world’s leading corporations and consumer brands. It is one of the nation’s fastest growing, full-service public relations firms with offices in New York, New Jersey, Washington, D.C., Los Angeles, London, Frankfurt and Tel Aviv.

The post Press Release: The Stevens Group Announces Its Fifth Transaction of the Year first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Why a Buyer’s Vision Must Align With a Seller’s Vision

Tue, 11 Aug 2015 14:04:00 GMT

In a number of articles I’ve written for PRSA over the years, one of the recurring themes is the importance of chemistry when reviewing the merits of combining two agencies.

I don’t mean to sound naïve. On the contrary, it’s more than a decade of real-life experience in the PR agency mergers and acquisitions world that has taught me to place chemistry a couple of notches above purchase price, which conventional wisdom mistakenly considers to be the Holy Grail for a successful merger.

In fact, I don’t even put purchase price in the “place” position, given all of the changes occurring in the PR agency mergers and acquisitions marketplace these days.

In my opinion, vision and the buyer’s strategic direction ranks right alongside a good rapport as a vital criterion for joining forces with a buyer.

Here’s why:

Strategic collaboration

There are more buyers out there than ever before. And their agencies’ substance and shape change as often as an amoeba’s does.

There are still the major holding companies, of course — Publicis, IPG, WPP, Omnicom and Havas, and there are also overseas buyers. Mid-sized ad agencies are adding PR services as another strategic arrow in their quiver, and smaller PR agencies are acquiring even smaller shops. More private equity firms are turning to public relations and digital/interactive sectors as promising growth categories. And a series of “rollup” firms have now come onto the scene as well.

To be sure, there’s nothing new about rollups. Peter Gummer pioneered the initiative when he founded Shandwick in the ‘70s and made about 20 independent agency acquisitions. All kept their own names for a period of time, until Gummer proclaimed that all Shandwick-acquired firms would lose their existing monikers and simply be called “Shandwick.” Gummer then sold Shandwick to Interpublic, where it subsequently merged with Weber to become Weber Shandwick. Today, all of the rollup companies I’m aware of allow their acquisitions to retain their names, following the Shandwick model.

Renewed energy

In almost every situation where The Stevens Group is involved — plus every scenario that I’m aware of where we’re not involved — the rollup company’s game plan is to reach a certain size and then have a liquidity event, where it sells to a larger company or goes public.

The seller usually gets the opportunity to double-dip by reaping the benefits of an initial purchase price, while also in line to capitalize on the liquidity event down the road.

This takes us to the current mergers and acquisitions marketplace. Most current sellers don’t want to sell and walk away; they want to stay. They want to jumpstart their careers and play an integral role in the new parent company by bringing all of their experience as agency founders and owners to the big stage. Successful entrepreneurs can continue their careers with renewed energy when a buyer of their choice acquires them.

Earnest discussions

My team and I always advise sellers to have earnest discussions with the buyer about the goals, direction and aspirations of his or her organization. If a seller is looking for a plain-and-simple exit strategy, and his or her deal is based on an earnout, then it’s important for the seller to be certain that the buyer’s organization has the financial resources to stick to the terms of the agreement.

But if the seller still loves the business and has the fire in him or her to continue working indefinitely (as most sellers are now doing), then the two sides need to agree on strategic direction for future growth, which can be the most important consideration for both.

A seller who is ambitious and wants to become part of senior management in an acquiring company is better off joining an organization that has demonstrated an ability to grow and manage its development through strategic hires, other acquisitions and expertise in the niches that it serves.

A buyer who is expanding his or her bandwidth by acquiring your firm for its special niche and capabilities could be in a position to help a seller grow more rapidly. Remember that the seller’s future must be tied to the buyer’s future. That principle will help determine which route a seller should take when considering a buyer.

This is the future of PR agency mergers and acquisitions. The seller’s continuing role has become just as important as purchase price, chemistry and culture.

As originally published on PRSA Public Relations Tactics .

The post Why a Buyer’s Vision Must Align With a Seller’s Vision first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The Stevens Group Sell Test

Wed, 29 Jul 2015 14:03:00 GMT

If you’re thinking about selling your PR agency then here are ten important questions you should be asking yourself.

1. Have you made a list of reasons why you want to sell your firm?

2. Are you prepared to report to someone?

3. Do you have a realistic sense of the market value of your firm?

4. Will you be able to get alignment from your key senior managers?

5. Have you mapped out your plans for the future? For example, do you plan to retire, or stay on with the acquiring organization?

6. Is your firm in good enough financial shape to be of interest to a buyer?

7. Are you considering how your life might change if you were to sell your firm?

8. Do you have debt or liabilities that would make the sale of your firm more difficult?

9. Have you considered using professional counsel to help you make your decision?

10. Are you really serious about selling your firm? Or do you just want to go through the experience of having discussions with would-be buyers?

The post The Stevens Group Sell Test first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

The personal wealth of PR agency owners

Tue, 14 Jul 2015 00:52:00 GMT

Click here to view the original article

With the spate of agency acquisitions in recent years, you might think making a deal is easy. Far from it.

As someone who has worked closely with more than a hundred public relations agencies during the past 10 years, I am privy to one of the best-kept secrets in the industry. Most owners of independent PR agencies, regardless of their size, are very wealthy.

This fact, and it is a fact, doesn’t show up in PR agency benchmarking studies that include typical salaries of PR agency owners. These owners guard their best-kept secrets zealously and simply report what they consider to be industry standard salaries. But the profits they take out in the form of distributions during the course of the year are kept strictly confidential.

So if a benchmarking study reflects that the industry standard for an agency owner of a $5 million firm is a salary of, say, $300,000, you can be sure that this isn’t the whole story. Most likely, that individual will be pulling out more than $1 million a year.

The enormous sums of money taken by most PR agency owners lies buried in agency financials. They are buried under the headings of various other categories. It’s not uncommon for a PR agency owner of a $500,000 firm to take in at least $250,000. Nor is it uncommon for a PR agency doing $3 million in fees to generate almost $1 million a year for its owner.

If a PR agency with fee billings of $5 million does around a 30% profit, after all other overhead including staff salaries that generates about $1.5 million in profits. Guess who gets to keep most of that?

Consider this. A key number two senior manager in a $5 million agency may earn a salary of around $250,000. And I’m being on the generous side. This senior manager may manage many more professionals than the owner of a $500,000 PR agency. Yet the latter individual often takes in considerably more than $250,000 a year. Is it any wonder that more and more PR agencies are being started than ever before?

I am personally aware of one independent PR agency owner that earns more than $5 million a year. And the agency isn’t even among the top 20 in fee billings. This individual earns more than the CEOs of holding company PR agencies. Ah, the joys of growing your own business.

The various economic downturns of the past 15 years tended to sober up agency owners. Some lost their agencies because they couldn’t handle the dire steps necessary to keep their businesses afloat.

Yet, there comes a point in the lifetime of a PR agency owner when he or she would like to sell the agency. The question becomes how does an agency owner capitalize on the enormous profits the agency has generated in order for him to become as wealthy as he is? Can a buyer find a way to reward the agency owner with a purchase price that is appealing and still recognizes the enormous hurdle that would have to be overcome to generate more dollars for the owner than he’s already taking on his own?

During my travels through the world of PR agency M&A, I’ve come across a number of primary reasons a PR agency owner wants to sell:

Taking as an example the owner of a $5 million agency who takes out about $1 million a year, how can an acquisition be structured that would accommodate the owner’s present income base with a realistic marketplace value? Typical deals are usually based on fee income or bottom line, or both. Typical deals these days are one times net fee income or five times bottom line. So if an agency is doing $5 million and it generates a profit of $750,000 a year, then that agency could be worth around $5 million.

But if that agency is generating a profit of 30% and the owner takes $1 million a year, then in five years, that owner would personally take in $5 million. If he is offered even $7 million for his agency, then it’s not economically worthwhile for the owner because he would net a mere $2 million for his agency. It’s worth a hell of a lot more than that but buyers may be wary throwing around big bucks for a potentially uncertain future.

The truth is that it’s easier structuring a deal for an agency doing a 15% profit than for a 30% profit. So given this interesting phenomenon in the agency business, how can deals be done for firms generating enormous profits and huge windfalls for their owners? Here are the criteria:

These are some of the ways in which compromises can be made to allow a seller and a buyer to close a transaction when the seller personally generates an enormous income. The seller must be willing to be flexible if the goal is to either exit or enter. Looking at it another way, the seller is already quite rich if he’s run the business well. This doesn’t mean that he wants to give the business away. What it does mean is that the seller may be so ready for the next major change in his life that he’s willing to work with a desired buyer to make a deal happen.

The post The personal wealth of PR agency owners first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Internet/Digital Now a Greater TSG Focus

Mon, 13 Jul 2015 17:45:00 GMT

For the past year, The Stevens Group has made a concerted effort to expand its reach beyond its well-established M&A expertise in the PR agency industry to include digital, interactive, traditional advertising, social media, experiential and other marketing communications services.

The reasons were rather obvious. For one, it became very apparent that many PR agencies needed to expand their digital capabilities to offer inbound marketing, social media, SEO and SEM as well as other digital media and marketing offerings. This trend really came to a head in the past few years and in fact, the PR industry in general was behind the curve and needed to catch up.

As a means of doing so, The Stevens Group has been on the lookout for breakthrough firms which could be acquired rather than prospective buyers attempting to build these capabilities organically. To accelerate this expansion of focus, TSG invited Mark Severini to join the team as senior associate in charge of these new services. Mark has extensive experience in the digital/interactive arena. He’s been actively involved with starting up and counseling the management of firms in this niche. TSG is pleased to have Mark share his experience and expertise in what is fast becoming the next breakthrough phase of marketing communications.

Click here to read Mark’s full bio.

The post Internet/Digital Now a Greater TSG Focus first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Debating the Future of Earnouts

Thu, 07 May 2015 22:51:00 GMT

Ever since a farsighted PR or ad agency determined that an additional way to grow its business was to acquire other PR agencies, the manner in which most transactions are completed today hasn’t changed much since the ink dried on those precedent-setting M&A deals of yesteryear. Is that a good or bad thing? Let’s take a look.

This dates back to when Bcom3 MSLGROUP, Hill & Knowlton acquired Carl Byoir and Publicis Groupe acquired Lobsenz-Stevens.

The gold standard for doing deals was built around the “earnout,” the term used to define the means by which the owners of the selling firm would be rewarded if it did well, and penalized if it didn’t. The value of the transaction between buyer and seller was — and most often still is — predicated by a formula based on projected revenue and profits for three to four years from the date of closing.

In the ensuing years, it didn’t matter if the seller agency brought in wondrous new accounts, as long as other existing clients didn’t go out the window and result in a revenue dip that exceeded the gains from the much-heralded new business wins.

It also didn’t seem to matter what the working relationship was like between buyer and seller, as long as the projected revenue numbers were being met. Even today, there are buyers who are so transfixed on a seller’s prior years’ tax returns that they look to the financials before meeting the individuals who they will be working closely with for the next three years.

For far too long, the basic tenets of successful acquisitions — chemistry, culture and compatibility — have been forgotten. Many buyers seemed to conflate the standards that a company should use to evaluate the purchase of a creative, service-oriented entity, like a PR firm, with the accounting metrics that industrial enterprises commonly apply when acquiring an available spark-plug manufacturer.

A PR agency is not a gadget-maker. In the world of PR agency M&A, there isn’t any industrial machinery, assembly lines or product inventory to factor into the valuation equation.

The only inventory that a PR firm has is its people and its clients. Period. Buyers tend to forget this, and instead, they perform due diligence rituals on a PR agency as if a firm is analogous to that metaphorical spark-plug manufacturer. It’s not.

The earnout profitability
So how can this nut-and-bolts buyer evaluation mindset affect the concept of earnouts in the M&A space of public relations.

Traditionally, PR acquisitions are made on the basis of varying percentages divided into two stages. Stage 1 includes upfront payment to the seller. Stage 2 includes the predetermined incremental payments dictated by profit multiples, stretched out over a three- to-four year period.

When executed this way, the owner of the seller firm that has a profit margin of 25 percent will do far better at the bargaining table than the owner of a seller firm with a profit margin of 10 percent.

But does this mean that the more profitable agency always turns out to be a better deal for the buyer? Hardly. It simply means that the owner of the more profitable agency likely knows how to manage a PR firm.

Over the years, I’ve witnessed a number of situations where the more profitable agency loses more clients along the way than the less profitable one. The reasons for this vary. But often, client defection is a result of slavishly profit-centric policies on the part of management that lead to under-servicing and understaffing even their most valued clients. If you’re a buyer, then is this what you really want? What if you are a very profitable, but poorly performing agency?

If so, then I say buyer beware. You could end up being disappointed when the seller begins to lose clients and some of its best people during the year following the acquisition. What appeared to be a prudent purchase decision on paper could turn into a lemon of a deal in the real world.

Conversely, would a buyer be better off acquiring a less-profitable agency — one with stable and happy accounts, and a staff that will propel it into the future — particularly in light of the synergies that almost inevitably accrue to the combined entity, as a result of the consolidation?

As I see it, though, the problem with traditional earnouts is that they’re all about making high profits for both the buyer and the seller, and less about the quality of service. If a seller wants to maximize profits during the three or so years of an earnout, then he or she is incentivized to cut costs and staff — often at the seller’s peril.

The seller will do whatever it takes to get that profit ratio up so that he or she can leave the post after the requisite employment contract expires with wheelbarrows full of money.

The buyer-seller relationship
You might ask then, if these are the dynamics of a buyer-seller working relationship for the three-year period following the closing of the deal, then how will that arrangement impact the eventual working relationship between the buyer and the seller?

Well, for starters, the buyer might be reluctant to refer business to the seller because it would mean having to pay the seller more in the short term. It could also result in the seller losing the people who made the firm attractive to the buyer in the first place.

At The Stevens Group, we believe that there is a better way to forge a business relationship between a PR agency buyer and seller so that the financial arrangements — while an important factor in any negotiation — aren’t the only yardstick used to bring the two parties together. Let’s not overlook the fact that buyers acquire PR agencies for the following reasons:

To help achieve critical mass and growth above and beyond organic growth
To embrace the talents and quality of additional professionals
To immediately add complementary clients to their roster
To establish a foothold in a complementary or similar niche
To establish a presence in a different geographic area
To enable the buyer to increase the profitability of his or her firm in tandem with the seller’s
While risk on the part of both buyer and seller is still a significant consideration in the art of any deal, we try to be more inventive and suggest more accommodating acquisition models to the owners of the buyer and seller firms who we work with.

The newer models that we’re hatching are designed to minimize risks and embrace other criteria in addition to profitability. Those criteria include revenues, account stability, buyer willingness to give more credit to the seller for buyer-driven new business, workforce stability and other intangibles that don’t necessarily add to the bottom line.

Traditional earnout scenarios will eventually go the way of the Edsel — it’s already happening — and that newer, more growth-oriented terms will bring PR agency buyers and sellers together for the long term.

As originally published on PRSA Public Relations Tactics .

The post Debating the Future of Earnouts first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

PR Agency Industry Survey Reveals Many Surprises

Sat, 04 Apr 2015 14:17:00 GMT

Here’s the cycle. Young PR agency account executives aspire to greater things. Since the cream always rises to the top, many account executives will go on to become senior managers of their agencies.

They may move around a bit to other agencies aspiring to ever broader responsibilities, job titles and compensation. But the itch to do their own thing grows stronger and a number of these former account executives start their own agencies.

Fast forward. These new owners learn the ropes of running a business in addition to providing PR services to clients. They grow their firms and establish reputable brands. This whole process from the launch of a career in public relations to being in business for oneself may take ten years or so. And the process of starting a new agency and growing it to its present level may take at least another ten to twenty years.

Whew. That’s a lot of clients under the bridge. So now the agency owner is middle aged, has a family, has built some assets and is ready for the next step – which is?

To continue running the business for another ten years, sell the agency and stay on. Or sell the agency and do something else. These are all logical steps and considerations in the life of a typical pr agency owner. But just what is the current prevalent thinking of pr agency owners about the moves they can make and the futures they envision?

My firm, The Stevens Group , just concluded a survey of more than a hundred pr agency owners. Since our primary business is to facilitate mergers and acquisitions in the pr agency industry we wanted to find out if pr agency owners understand the realities of this marketplace and are capable of making decisions that are right for them.

The survey was conducted of pr agency owners of firms ranging in net fee income from $500,000 to $10 million. Ninety-two per cent of pr agency owners plan to sell their firms at some point and of that number, almost half plan to sell within the next five years.

This is a surprising result. Think of it this way. Of those pr agencies that existed ten years ago did 92 per cent of them sell their firms in the interim? Not at all. In fact, I would venture a guess that a mere 10% of pr firms existing ten years ago actually sold.

Does the current survey tell us that all of those agencies that have been in existence ten years are now for sale? That the owners have thought about it long and hard and now plan to sell? Will there be a glut of pr agencies on the market going forward? There are literally thousands of pr agencies now operating in the U.S. Does this mean that more than a thousand agencies will be for sale?

Can the marketplace absorb this glut? What will this do to the purchase price of such agencies? Will the value of pr agencies go the way of worldwide oil prices?

And are there enough buyers to absorb so many agencies? These are all very valid questions. The answer is that even though some 92 per cent of present agency owners are planning to sell their agencies not all of them will be sold. And this will come as a rude awakening to many pr agency owners who think that by merely putting their agencies on the market that an automatic sale will take place.

Buyers can afford to be more selective. And just as the smart, aggressive, committed pr agency account executive referred to earlier will rise to the top, so will the better run agencies rise to the top of a buyer’s wish list. If a pr agency owner wishes to sell his business there are certain criteria that must accompany that wish. The agency must be reasonably profitable, well run, offer superior services, have high quality senior management, have a stable of reliable accounts and offer niches that are attractive to buyers.

The fact is that pr agencies today not only compete for clients but for marketability of their agencies. Since so many pr agencies will be on the market during the next few years, the agency that wishes to be sufficiently appealing to a buyer must learn what a buyer expects. Such expectations may result in pr agencies totally streamlining their business practices and metrics to be ever more appealing.

The competition to be acquired will become just as fierce as the competition for new clients. But both considerations are equally important to pr agency owners. If you want to sell your agency amidst the rising selling mentality of agency owner then shape it up.

As originally published on CommPRO.biz .

The post PR Agency Industry Survey Reveals Many Surprises first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Fast forward. These new owners learn the ropes of running a business in addition to providing PR services to clients. They grow their firms and establish reputable brands. This whole process from the launch of a career in public relations to being in business for oneself may take ten years or so. And the process of starting a new agency and growing it to its present level may take at least another ten to twenty years.

Whew. That’s a lot of clients under the bridge. So now the agency owner is middle aged, has a family, has built some assets and is ready for the next step – which is?

To continue running the business for another ten years, sell the agency and stay on. Or sell the agency and do something else. These are all logical steps and considerations in the life of a typical pr agency owner. But just what is the current prevalent thinking of pr agency owners about the moves they can make and the futures they envision?

My firm, The Stevens Group , just concluded a survey of more than a hundred pr agency owners. Since our primary business is to facilitate mergers and acquisitions in the pr agency industry we wanted to find out if pr agency owners understand the realities of this marketplace and are capable of making decisions that are right for them.

The survey was conducted of pr agency owners of firms ranging in net fee income from $500,000 to $10 million. Ninety-two per cent of pr agency owners plan to sell their firms at some point and of that number, almost half plan to sell within the next five years.

This is a surprising result. Think of it this way. Of those pr agencies that existed ten years ago did 92 per cent of them sell their firms in the interim? Not at all. In fact, I would venture a guess that a mere 10% of pr firms existing ten years ago actually sold.

Does the current survey tell us that all of those agencies that have been in existence ten years are now for sale? That the owners have thought about it long and hard and now plan to sell? Will there be a glut of pr agencies on the market going forward? There are literally thousands of pr agencies now operating in the U.S. Does this mean that more than a thousand agencies will be for sale?

Can the marketplace absorb this glut? What will this do to the purchase price of such agencies? Will the value of pr agencies go the way of worldwide oil prices?

And are there enough buyers to absorb so many agencies? These are all very valid questions. The answer is that even though some 92 per cent of present agency owners are planning to sell their agencies not all of them will be sold. And this will come as a rude awakening to many pr agency owners who think that by merely putting their agencies on the market that an automatic sale will take place.

Buyers can afford to be more selective. And just as the smart, aggressive, committed pr agency account executive referred to earlier will rise to the top, so will the better run agencies rise to the top of a buyer’s wish list. If a pr agency owner wishes to sell his business there are certain criteria that must accompany that wish. The agency must be reasonably profitable, well run, offer superior services, have high quality senior management, have a stable of reliable accounts and offer niches that are attractive to buyers.

The fact is that pr agencies today not only compete for clients but for marketability of their agencies. Since so many pr agencies will be on the market during the next few years, the agency that wishes to be sufficiently appealing to a buyer must learn what a buyer expects. Such expectations may result in pr agencies totally streamlining their business practices and metrics to be ever more appealing.

The competition to be acquired will become just as fierce as the competition for new clients. But both considerations are equally important to pr agency owners. If you want to sell your agency amidst the rising selling mentality of agency owner then shape it up.

As originally published on CommPRO.biz .

The post PR Agency Industry Survey Reveals Many Surprises first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

SGP Worldwide Facilitates Latest Finn Partners Acquisitions

Fri, 06 Feb 2015 01:44:00 GMT

The Nashville-based communications firms of DVL Public Relations & Advertising and Seigenthaler Public Relations, Inc. will merge and be acquired by global agency, Finn Partners .

SGP Worldwide introduced Finn Partners and Seigenthaler PR to each other and then over time facilitated the transaction in which Finn Partners acquired both Seigenthaler and DVL.

The new combined agency will be known as DVL Seigenthaler, a Finn Partners Company and it will be the biggest public relations agency in Nashville and in the state of Tennessee, and one of the largest public relations firms in the southeastern U.S. Together the combined operation will have annual fees of approximately $11 million with a staff of 80. This acquisition will bring Finn Partners annualized fees to approximately $65 million, its total number of employees to 450 and its number of offices to 12.

Beth Courtney will serve as President and Ronald Roberts will serve as CEO of DVL Seigenthaler. They will report to Richard Funess, Senior Managing Partner of Finn Partners.

Finn Partners was launched in late 2011 to realize Peter Finn’s vision to create a leading public relations agency dedicated to shaping a bold new future in which innovation and partnership are strong drivers of the brand. Finn Partners is ranked as one of the top ten, and also as one of the fastest growing independent PR firms in the U.S.

SGP Worldwide has worked with Finn Partners since its inception. It has facilitated two other acquisitions for Finn Partners – M. Silver, a travel and tourism PR agency specialist; and Widmeyer Communications, a Washington, D.C. based education, public affairs and general PR agency.

SGP Worldwide is co-managed by Rick Gould and Art Stevens. Each has also started his own PR agency consulting and mergers/acquisitions firm in 2014. SGP Worldwide will nevertheless continue into the near future because of the pipeline of clients retained by that entity.

The post SGP Worldwide Facilitates Latest Finn Partners Acquisitions first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

What Selling Your PR Agency Can Do for You

Wed, 03 Dec 2014 00:44:00 GMT

As published in PRSA Public Relations Tactics
By Art Stevens, APR, Fellow PRSA

The most successful acquisition transactions that I’ve been involved with put a spring in the step of the principals of the PR agencies who have sold to larger buyers. It has less to do with extra money in their pockets. But it has everything to do with their new roles in the buyer’s organization.

The best time to sell your firm is not when you’re ready to retire — it’s when you’re ready to jumpstart your career. It’s not when you can get the most money for your business, but when your future with a buyer’s company can get you excited about public relations again. It’s not when your profits are at their zenith, but when your zest for the next phase in your career is at its highest.

The current acquisition marketplace tells us the following: Buyers aren’t looking for sellers to embark on an exit strategy; they’re looking for sellers to partner with them so that both can achieve higher goals by working together into the future.

I have conversations with many prospective sellers all of the time. Among the beliefs that many still swear by are that they should sell their PR agencies when profits and revenues are at their historic highs, when they’re ready to retire or work part time and when they can get the most money for their businesses. No, no and no. Not this time around.

The best time to sell your firm is not when you reach a targeted revenue number. It’s when an opportunity to partner with a compatible buyer can enhance your life. The buyers out there are now considerably more aggressive in finding compatible matches than ever before. And, believe it or not, more sellers are connecting with buyers that haven’t even offered the highest price. The reason? Lifestyle.

Buyer-seller compatibility

First of all, the demographics of buyers have changed drastically. Buyers are no longer the largest companies, but are the medium to small-sized ones. The bottom line is not the primary tool in evaluating the efficacy of deals anymore. It is more the fit that will determine if a transaction is destined to be.

As one buyer told me recently, “If the seller and I are compatible and are excited about what we can accomplish working together, then that means everything to me. The rewards will follow.”

Many sellers are unable to grow rapidly. They are stymied by the size that they have reached. Their lament is that they can’t get invited to compete for the larger accounts. This lament is actually the truth. But when partnering with a larger agency, the combined operation is able to compete on a higher level.

A buyer’s company should never be a graveyard for a seller’s firm, but a rebirth. That is what the current marketplace tells us. Gone are the days when the first step that a buyer wants to take when evaluating a prospective acquisition is to review the financials. Now meeting first and spending time together is more the bellwether. If there isn’t any comfort level between buyer and seller, then an evaluation of financials won’t even take place.

So when should a seller consider selling? At any time. Why wait three to five years if you can reap the benefits now? Size is no longer a prerequisite for most buyers. But niche, style, chemistry, talent, location and client base are. Even firms with revenues of well under $1 million can be of great interest to certain buyers.

There are many rewards for agencies that consider selling: being able to compete for larger clients, having the support of a larger agency’s staff and resources, turning over the administrative/backroom/clerical chores to the buyer’s team, getting to focus more on clients and business development — and there’s an exciting future for the seller’s staff as well.

Selling a firm is like creating an annuity for all team members. The legacy of the selling firm continues unabated. The owner becomes a key player in the buyer’s organization. If the two cultures fit, then there is excitement, promise, opportunity — and a new spring in your step.

Click here to view original article.

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THE STEVENS GROUP AND UK BASED M&A ADVISORY FORM AFFILIATE WORKING RELATIONSHIP

Wed, 19 Nov 2014 01:43:00 GMT

THE STEVENS GROUP AND UK BASED M&A ADVISORY FORM AFFILIATE WORKING RELATIONSHIP

THE STEVENS GROUP , a U.S. based mergers and acquisitions consultancy in the public relations and marketing communications industries, has announced that it has completed an agreement with UK based M&A Advisory to provide mutual clients with full international capabilities.

M&A Advisory , founded and headed by David Blois, is headquartered in London and facilitates mergers and acquisitions in the public relations, digital marketing, software, technology and social media industries. Its base of operations is the UK, Europe and the Far East. David Blois founded the firm in 2012 after spending sixteen years as regional director of Results International. His team consists of experienced professionals having held senior positions with Saatchi and Saatchi, Reed Elsevier, Morgan Stanley and Results International.

THE STEVENS GROUP was formed in 2014 and is headed by Art Stevens, still co-managing partner of SGP Worldwide. Stevens has been in the forefront of major acquisitions in the public relations agency industry for ten years after having sold his public relations firm LobsenzStevens to Publicis Groupe.

“This affiliate working relationship will prove beneficial to buyers and sellers on both sides of the Atlantic. David and I are able to extend our respective reach to buyers and sellers interested in the U.S. marketplace and vice versa. This bandwidth is essential in a world where borders are beginning to make very little difference in marketing communications services,” Stevens said.

Among recent acquisitions Stevens has been involved with, as Co-Managing Partner of SGP Worldwide, are the combination of Middleton & Gendron to Eric Mower + Associates; and the acquisitions of Turner PR to Fahlgren Mortine; and Widmeyer Communications to Finn Partners.

For more information about The Stevens Group, go to www.theartstevensgroup.com or call (732) 748-8583.

For more information about M&A Advisory, go to www.mandaadvisory.com or call (+44) 207 6809849.

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Nourie Sees Revamped, Expanded Role for PR Firms

Mon, 27 Oct 2014 17:19:00 GMT

By Greg Hazley

Financial communications vet Phil Nourie has opened a new shop, NouriePR+ , centered on B2B marketing communications and strategic counseling as he looks to widen the scope of PR counsel beyond traditional media relations and “upend” the PR agency model.

Nourie said he’s serving middle market and well-funded start-up stage clients that PR firms have traditionally ignored or under-served as they rely too much on junior staffers providing uneven media relations services that are drying up.

“Clients just aren’t getting value that way,” he said. “PR firms in those markets never really got into marketing and business development advising,” he said, adding: “I’m not trying to compete with PR firms but I think there’s value in a strategic counseling role coming from a media relations background.”

Nourie starts up with clients like registered investment adviser Warren Financial Service, REIT Kairos Real Estate Partners and the Arthur Ashe Learning Center, among others, providing services from business development counseling and content creation to digital services and advertising.

Nourie, who merged his six-year-old firm into the Financial Relations Board in 2007 and another start-up, Nourie Johnson, into Stanton PR & Marketing in 2011, said he believes many media relations-centric firms are losing from 20 to 30 percent of that business a year, adding new work to replace shrinking budgets rather than address underlying issues.

The PR exec said he sees an agency model he dubs the “agency’s agency,” similar to what some tech and pharma sales companies have pursued to boost revenue without the expense of full-time employees and the associated costs. He is working with PR firm and M&A adviser Art Stevens on that effort.

He added: “Attaining the kind of profitable clients agencies want today is no longer about knowing the right people; it’s far more complex than that”

Click here to view the original article on O’Dwyer’s.

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Eric Mower + Associates and Middleton & Gendron Combine Operations

Sat, 25 Oct 2014 21:49:00 GMT

Combination Brings EMA to New York City

SYRACUSE, N.Y. – Eric Mower + Associates , one of the largest U.S. independent marketing agencies, is combining with Middleton & Gendron , a public relations and brand communications agency in New York City. The parties were introduced by SGP Worldwide.

This combination continues EMA’s growth as a national agency and extends the public affairs reach of its Albany office. EMA—which also has offices in Cincinnati, Atlanta and Charlotte, N.C., plus three other Upstate New York markets of Buffalo, Rochester and Syracuse in addition to Albany—now serves clients from eight different cities.

M&G is a nationally recognized leader in public relations and marketing in the luxury hospitality, travel and lifestyle categories. In more recent years, the agency’s practice has expanded to include real estate, business to business, retail and fitness. The agency’s clients have included Four Seasons Hotels and Resorts, The Savoy Group, Singapore Airlines, Rolex and FAO Schwarz. M&G’s Chairman Yvonne Middleton and President Mary Gendron, who founded the firm in 1978, will continue to lead the New York City office and join EMA as partners. M&G’s full professional staff will continue to lead client teams and be retained as part of M&G/EMA.

Together, EMA and M&G create a digitally-integrated independent marketing and public relations agency with more than 250 professionals and estimated 2014 capitalized billings approaching $250 million. M&G will continue operations as M&G/Eric Mower + Associates until the end of 2015 and then adopt the EMA name, as has happened in other combinations in other markets. The combination formally takes effect Nov. 1.

The post Eric Mower + Associates and Middleton & Gendron Combine Operations first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

Art Stevens Forms The Stevens Group

Thu, 16 Oct 2014 04:04:00 GMT

ART STEVENS ANNOUNCES FORMATION OF THE STEVENS GROUP

Art Stevens, co-managing partner of SGP Worldwide (StevensGouldPincus) has announced the formation of The Stevens Group.

Serving as its founder and managing partner, Stevens will provide such services to PR agencies and organizations as mergers and acquisitions facilitation, consulting, personal asset management, business development, profitability enhancement, operational streamlining, key employee retention, and leadership coaching and training.

The Stevens Group will continue providing key executives to PR agencies. It will extend its role in the PR agency space by establishing a new practice in new media, interactive, digital, social media and online marketing. In addition to continuing his run as one of the key leaders in the PR agency world of mergers and acquisitions, Stevens will now be able to offer quality new media firms to potential buyers.

Stevens has put together a team that provides a broad range of services to PR agencies. TSG’s senior associates consist of individuals who have collectively contributed to the goals and aspirations of PR and marketing communications agency owners for a number of years.

Stevens will remain co-managing partner of SGP Worldwide into the foreseeable future helping to oversee its present pipeline of merger, acquisition and consulting clients. SGP has been serving the PR agency marketplace for the past ten years. Among its recent transactions are the acquisition of Schwartz Communications by MSL Group of Publicis, Widmeyer Communications by Finn Partners, and Turner PR by Fahlgren Mortine.

Stevens founded and ran LobsenzStevens, a top-twenty-five independent PR agency headquartered in New York before its acquisition by Publicis Groupe. He is the author of “The Persuasion Explosion”, a bestselling non-fiction book about the role of public relations in contemporary American life.

He also taught public relations at Fairleigh Dickinson University, is the recipient of the John Hill Award for lifetime achievement in the public relations field presented by the New York Chapter of PRSA; and is the recipient of the Patrick Jackson Award by PRSA national also for lifetime achievement.

He is a PRSA Fellow, past president of the New York Chapter and a past board member and officer of PRSA national.

For more information about The Stevens Group, go to www.theartstevensgroup.com or call (732) 748-8583.

The post Art Stevens Forms The Stevens Group first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

You Can’t Always Sell When You Want

Tue, 19 Aug 2014 02:24:00 GMT

As published in O’Dwyer’s Daily

By Art Stevens, APR, Fellow PRSA

To parallel the famous Rolling Stones song, “You Can’t Always Get What You Want,” PR firms may also not be able to sell when they want.

During my ten years’ experience in consulting with PR agencies of various sizes on future strategies, I have found that many PR agencies may not ever be able to sell their firms and would either have to sell to their key employees or phase out completely.

On the other hand, it’s almost every agency owner’s goal to reach a point in the agency’s growth to become marketable and generate a satisfactory return on investment for all the years of toiling and sweat equity. Selling one’s agency isn’t solely a matter of being in the right place at the right time. It’s a matter of planning ahead and putting oneself in the position of being attractive, synergistic and financially feasible.

If there’s any one principle I’ve learned all these years it is that as attractive as the mergers and acquisitions marketplace currently is not every firm that wants to sell will be able to. Why not? Here are some reasons.

1. The owner is unrealistic about how much his firm is worth in the acquisition marketplace. I always make it a point to have a reality check discussion with agency owners before representing them to sell their firms. This necessary exercise will determine if there’s a chance in hell that any reasonable offer could be consummated.

If, for example, the owner of a $1 million net fee income firm is asking for a purchase price of $3 million I tell that individual to bet on horses instead. His odds of generating that kind of value is better at the racetrack than at the conference room table.

2. If you don’t have dependable second tier management in place then your worth to buyers is narrow and restricted. More often than not these days buyers are looking for well-run agencies regardless of their size. They want to evaluate the management team supporting the agency owner in the event the owner decides to drop out shortly after a transaction is completed.

Buyers are higher on agencies that have such management teams in place. But if the agency produces one owner and multiple junior account executives then the agency’s value will plummet.

3. An initial vetting process will determine if an agency owner can learn to report to someone from the buyer’s management team after a transaction is concluded. There are some agency owners who fool themselves into thinking that the transition to acquired firm will change nothing in his present management structure.

In the ten years I’ve been doing M&A work, I have run into a number of agency owners who I knew in my heart could never report to anyone other than themselves. Such individuals could never be happy in the strange, new environment of being an acquired firm. Being an acquired firm also means cultivating an acquired taste — a taste for bigger, more comprehensive, and more aggressive management styles. Let’s face it. Any firm that adds acquisitions to its base is by definition bigger and more aggressive. Buyers want to grow both organically and by acquisition. And ultimately a seller has to accommodate this dynamic.

Some agency owners simply can’t.

4. Don’t even think about selling if your agency has just come through several down years in a row and is in decline. Some agency owners feel that the way out of this dilemma is to sell their agency and let the chips fall where they may. Not a good idea.

If as a potential seller you feel strongly that better days are ahead, that you have an active new business pipeline and that your present client base is solid — then wait. If you can achieve even two good years back to back your value in the marketplace will rebound in your favor. Buyers prefer situations that demonstrate growth and an upward curve.

I’ve urged agency owners who wanted to rush into the acquisition marketplace as a last ditch effort to hold off. It wasn’t the time and the price would not have been right.

5. You may not always be able to sell when you want but chances are good that if you’re patient the right buyer will come along eventually. There’s always the right match to be made. It doesn’t matter where you are geographically, what your specialties and niches are and what your fee levels are. You may need to go through a number of discussions with prospective buyers before the right fit becomes apparent.

My role as an acquisition facilitator is to match a potential seller up with just the right buyer. My job is to find a buyer that likes the niche you’re in, likes your client base because it complements his, likes your team and believes that your geographic location makes sense. These buyers aren’t always readily apparent at the get go. But proper research and vetting will weed out those buyers that find your agency appealing. This all takes time and patience.

If you lack patience then don’t entertain being acquired.

6. Don’t sell if you’re not profitable — unless you want peanuts on the dollar. It always amazes me how many agencies just barely break even or just make a few bucks. This is no way to run a business. Nor is it a good formula for selling what may be your single largest asset — your PR firm.

Run your PR agency like a business not like a mom and pop shop. If you don’t know how to change things to become profitable then engage a consultant like me to help you. With just a few changes in your operation you can achieve higher profitability than ever before and your firm will be worth immeasurably more.

So the bottom line is that while you can’t always sell when you want, you can plan to sell when you can. Are you currently a candidate for selling? Reread my six considerations above and you will have a head start in your planning.

Click here to view the original article.

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So You’re Managing a Successful PR Agency?

Thu, 06 Mar 2014 02:27:00 GMT

As published in PRSA Public Relations Tactics

In my first post on the subject “So You Own a PR Agency? Where Do You Go from There?” from Jan. 8, we covered the necessity of running a PR agency like a business, we focused on growth and profitability, and we raised the subject of an eventual acquisition. It is now time to move on to your next series of considerations.

Many of you simply want to continue to run your own agencies for as long as you can. Maybe you feel like you haven’t been in business long enough to even think about selling. You’re having fun, your business is growing and you have exciting clients.

To those of you in this category, I implore you to manage your business profitably so that if you consider attempting to sell your agency one day, then prospective buyers will be pleased that you knew how to run a business well.

To those of you who are considering the possibility of selling your business in the near future, let me throw out some questions that will test your appetite for exploring such a move:

How willing are you to give up your independence?
Would you be comfortable reporting to someone else after years spent only reporting to yourself?
Are you willing to be an employee of a larger company?
Can you live with the fact that you may be put out to pasture after your employment agreement with a buyer ends or that you would have to sign a non-compete agreement and couldn’t restart your own agency for a certain time period?
If you can live with the consequences of these questions and still want to proceed, then let me paint the general landscape of current buyers and what their considerations are.

At one time, most of the PR agency buyers were the larger PR agencies themselves. With the rapid growth of agency revenues and client budgets, more buyers have come out of the woodwork than ever before.

Today’s buyers continue to include the big holding companies like Publicis, WPP, Interpublic, Omnicom and Havas. But buyers now include considerably smaller regional PR agencies, ad agencies and marketing service firms. They also include international players, digital communications firms and private equity firms. Buyers are now often in the range of $2 million to $10 million in net fee income.

Many buyers are first time entrants in the acquisition front. They have made the strategic decision within their own boardrooms that growth can best be accomplished through both organic means and key acquisitions. And once new buyers enter the acquisition marketplace for the first time, they are inclined to do so again.

That is why there are far more opportunities for sellers than ever before.

What buyers want now
But one major change has evolved during the past 10 years.

Acquisitions are now less about a seller seeking an exit strategy and more about continuing a career with a buyer’s organization. Buyers are seeking strong entrepreneurs as well as strong firms.

And because there are more options for sellers, you can be that much choosier. Once you select a buyer and close a deal, you can’t turn back. You’re now obligated to work with this buyer for at least the next three years. How can you be sure you make the right choice? Here are some rules of thumb:

1. Make sure that there is a strong cultural fit.
To be sure of this, I always recommend that a seller spends a fair amount of time with the buyer’s organization, particularly with the individual to whom the seller will report. The time to do this is before you sign a letter of intent, not after. Do a lot of due diligence on the buyer, organization, people, accounts, strategic vision, growth plan, track record and other recent acquisitions. Have conversations with the principals of other firms that this buyer has acquired.

2. Realize that acquisition terms are usually predicated on earnouts during a three-to-five-year period.
Be sure that the goals that the buyer sets for you to earn the maximum purchase price are fair, reasonable and attainable. Work with PR consultants who know the trends. Your PR agency is one of your major assets. Don’t shortchange it.

3. Be clear about your role in the new buyer’s organization.
The buyer will count on you to run your own operation independently — make sure that is the case — but you could play a senior management role in the buyer’s organization. If you’re interested in remaining with the company after your earn out period is reached, then you must lay the groundwork in advance.

4. Remember that a transaction is not only about money.
It’s about a happy and exciting lifestyle with an organization that is in harmony with your own.

5. Protect and retain your key people.
These individuals are not only important to your welfare but also to the buyer’s. They should be just as excited about the opportunities with the buyer as you are.

6. Analyze well in advance what you bring to the table.
That will help determine just how satisfied you’ll be and if you can reach your financials goals. Are you in a niche that is attractive to the buyer? Is the city that you work in of value to the buyer? Does the buyer already have an office in your city or will your firm be its first one? Are there any major client conflicts that you would need to resolve or is there a perfect fit between your clients and the buyer’s clients?

In the next post in May, we will talk about financials considerations, how deals are structured and what the risks and rewards are .

Click here to view the original article.

The post So You’re Managing a Successful PR Agency? first appeared on The Stevens Group | PR Agency Merger & Acquisition Consultants .

So You Own a PR Agency? Where Do You Go from There?

Wed, 08 Jan 2014 02:29:00 GMT

As published in PRSA Public Relations Tactics

Mergers and acquisitions are a constant fact of life for PR agencies. Have you thought about starting your own firm, and wondered about an exit strategy? Or do you manage your own agency and wonder what it would take to sell it?

PRSA member Art Stevens, APR, Fellow PRSA, managing partner of The Stevens Group, a StevensGouldPincus partner firm, has been valuing agencies, brokering mergers and acquisitions, and providing strategic advice for nine years. He is a former owner and CEO of LobsenzStevens, a Top-20 independent PR agency, which Publicis Groupe acquired. His new six- part series, exclusively for PRSA, will share what he’s learned over the years about what it takes make an acquisition.

Let me propose a toast.

Here’s to those of you who took the plunge, who deserted calm waters to dive into the world of PR agency ownership. You could have stayed at your present agency or organization and hoped that proper promotions and salary increases would find their way to you.

But you told yourself that your dream was to own your own business and continue to do something you love — the practice of public relations.

Did you know that people are starting more PR agencies today than ever before? I attended the spring conference of the Counselors Academy this past June and met a number of owners of recently established PR agencies.

My sincere congratulations to those of you who have joined the ranks of PR agency owners. And congratulations are also in order to those of you who have owned your agencies for more than five years. All of you, the newbies as well as the veterans, are now entrepreneurs in addition to being PR pros. And running a business is far different from anything you’ve ever done before.

I know because I headed my own firm, LobsenzStevens, for more than 20 years. It got to be among the top twenty independent PR firms before Publicis acquired it. And for the past nine years, I’ve been facilitating mergers and acquisitions in the PR agency industry. I also consult with PR agencies and can personally attest to the fact that many agency owners don’t know how to run a business.

Am I being unkind? When an agency owner who has been in business for more than five years tells me that she doesn’t know what her bottom line is, then I know immediately that although she services her clients well, she hasn’t made the jump yet to business owner.

The paradox is that most PR pros who start an agency want to sell it someday. What many don’t understand is that if they can’t get their businesses running like a business then an eventual interested buyer will pass.

Principles for Profit
During the course of this series of posts, I’m going to tell you what you need to do to run your business as if you could sell it tomorrow. And even if you never sell your agency, if you follow these principles, then you’re going to make a lot of money anyway.

I’d like to start out by giving you a few basic principles that apply to those on the cusp of starting a business as well as those who have owned their agencies for some time.

Now that you’re a businessperson, you need to understand how to control your costs. In time, you will need to rent office space and hire employees. And you will need to figure out what your profit goal is and what your own compensation should be.

If you’ve never done this before, then know that the planning can be arduous. But you must plan. You’re now wearing two hats: one of a competent PR pro who is valued by clients and one of a business owner who wants to make money in the process.

Trust me. If you can do this for at least three years in a row, then you’re a candidate for acquisition.

The first thing that any agency should do is become familiar with the StevensGouldPincus annual benchmarking survey. This survey polls about 150 PR agencies every year. Its principal goal is to evaluate annual agency profitability. The survey compares overhead costs as a percentage of gross revenue. The prevailing profitability ratio for PR agencies is 20 percent. This means that you need to configure all your costs, including salaries, so that they are 80 percent of your revenue. If you can manage to run your agency this way — regardless of its size — then you can become that much closer to being acquired.

The key question now becomes how can you make your agency profitable? And the answer lies in how you apportion your costs.

Rules of thumb: Do not overstaff, do not over-service clients, and develop metrics to determine the profitability of each account and the billability of your account team. I will get back to this in subsequent blog posts. But let me end this one by offering the following advice: Don’t start an agency if you aren’t committed to running it profitability and doing all that’s required to become profitable.

And begin to think about the next phase in your life, which could be anywhere from next year to the next five years. And that phase would be preparing your firm for an acquisition and working with new people. If you can picture that, then I will help you get there.

Click here to view the original article.

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