Yahoo Finance PR takeovers are all the rage as private equity piles in
Jess Jones takes a look at why M&A activity in the PR sector is on the rise, and asks whether it will continue
For the spinmeisters of public relations, advising clients on mergers and acquisitions is one thing, but managing their own company’s takeover is an entirely different challenge as many are discovering amid a rise in consolidation within the PR sector.
Last month, London-listed government relations and lobbying group Public Policy Holding Company (PPHC) made headlines with its £30m acquisition of Pagefield – its first acquisition outside of the US, where the company is based.
Oliver Foster, chief executive of Pagefield, said the deal marks its next phase of growth and “will open up a huge well of professional and international expertise to our clients”.
The takeover is part of an ongoing trend of consolidation in the sector. It can be traced back to 2020 when the UK’s largest public affairs agency, Cicero, joined AMO, a network of communications firms owned by Paris-based media giant Havas.
In late 2021, FGS Global, founded by former Remain campaign chief Roland Rudd, merged with Sard Verbinnen and Co, before selling a 29 per cent stake to US private equity firm KKR a few months later.
But M&A activity in the industry really ramped up in 2023.
Last year, PR and advisory giant Teneo bought London financial communications firm Tulchan for a reported £65m, SEC Newgate entered new ownership after Investcorp acquired a £100m majority stake, and US advisory firm Morrow Sodali, backed by US private equity giant TPG, snapped up London comms firm Powerscourt in a deal understood to be worth around £50m.
And after a flurry of deals this year, experts suggest that there is more M&A activity to come in 2024.
The value of global PR M&A deal activity has surged to $14.25bn so far this year, up from $2.25bn in 2023, according to Pitchbook data shared with City A.M., with backing from American private equity beasts playing a significant role.
Nicolas Moura, an analyst at Pitchbook, expects that this trend will continue, especially following the $13bn take-private of entertainment agency Endeavour in April.
“2024 is tracking to be a standout year for PR M&A activity given we have seen 51 deals YTD and expect an increase in M&A activity globally in H2 2024,” he said.
Just last week, WPP rejected a bid from KKR to take a majority stake in FGS Global, in which WPP holds a 55 per cent stake, according to reports.
But this increased activity, and interest from private equity firms, raises the question: what is driving this M&A activity?
Christian Sealey, international chief executive at Morrow Sodali, suggested it was because of rising demand for PR services. “Corporates are operating in an increasingly complex business environment, with heightened levels of stakeholder scrutiny and reputational challenge,” he said.
Powerscourt founder and chief executive Rory Godson told City A.M. that the UK has had a competitive advantage in news and public relations for years so it is “natural” that British firms would be at the centre of the consolidation trend.
He explained that PR firms offer “pretty predictable” revenue and clear business trajectories, making them attractive to investors.
For the PR firms themselves, these mergers can attract more business.
Powerscourt said the Morrow Sodali takeover will allow it to offer an investor’s perspective to its high-profile clients, which include fashion retailer All Saints and gambling giant Entain. And when Teneo bought Tulchan, UK boss Nick Claydon hailed the pick-up as “strengthening our financial and political offer.”
Overall, Godson views the industry consolidation as a good thing. For Powerscourt, which is headed to a bigger office this summer, it may well be.
But behind the polished public statements, there are hints of struggle for some PR companies.
It was revealed last week that Teneo chair Andrew Grant is set to leave the firm he founded. The Sunday Times cited “cultural differences” between Tulchan and Teneo.
Additionally, an increasing number of boutique firms are reportedly seeking to sell, fearing the impact of artificial intelligence on the market.
Either way, expect more deals to come.
