Bartering isn't just a practice for hard times. Case in point: The Horn Group, a San Francisco PR firm specializing in high tech, has capitalized on IPO-mania by forming its
own investment fund and accepting stocks from select start-up clients in exchange for communications counsel. "Our policy is, as soon as the [client] goes public and we're free
and clear to trade, we sell it all and distribute the earnings to employees," says Principal Sabrina Horn. Since the fund's inception last year, the agency has made two
distributions to its 60 staffers, both times putting roughly $2,000 in the pockets of each employee. Horn declines to get specific about deals with clients, but says her firm
sometimes takes stock in exchange for one month's retainer fee (which, in dollars, runs $20,000 to $25,000). In other cases, Horn says, clients have invited her firm to
participate as a private investor, or have offered pre-IPO stock at the "friends and family" rate.
Bartering services in exchange for stock can be advantageous for pre-IPO start-up companies and independent agencies (it reduces costs for the client and enables the agency to
offer a competitive benefits package). But it's an arrangement that requires serious homework. SEC regulations preclude agencies from buying stock in client companies that are
publicly traded, and there are other laws limiting PR firms that are subsidiaries of larger holding companies. Don't try this one solo, Horn warns. Call your tax attorney and
your accountant before you ink a deal.
(The Horn Group, 415/905-4000)