Once a sleeping dog when it came to acquisitions, PR giant Fleishman-Hillard has awakened.
For the first time in its 52-year history and with an undisclosed cash infusion from parent company Omnicom, FH CEO John Graham tells PR NEWS that FH "is looking at 15 acquisitions throughout the world" to help propel its workforce to 3,000 employees and its fees to more than $340 million in three years. When Graham took the helm in 1974, the companywas billing $600,000.
Fleishman-Hillard will buttress both its employee and client base through acquisitions and opening new offices, says Graham, in an exclusive interview one day after its Sept. 17-20 meeting with partners and other high-ranking officers came to a close in Phoenix. Graham provided a blueprint for FH's one- and three-year plans.
The key areas where FH is looking to buy small- to medium-sized agencies (under $10 million) are Spain, the United Kingdom, South Africa and the Midwest and Northwest of the U.S.
Omnicom's deal to buy FH closed last August and represents a telltale sign of the competitive terrain of communications today. Other signs that point to the health of the PR industry also surfaced this year, including Interpublic's July announcement that it will buy London-based IPR, which owns Shandwick and Golin/Harris; and Young & Rubicam, parent company of Burson-Marsteller, filing an IPO.
Let's Make a Deal
IPOs and M&As are the favored melange of business deals because they often equal an increase in capital as well as an opportunity for the acquired company to invest in new markets and new talent.
By buying existing businesses, Fleishman-Hillard's goal is to increase its fees to $168 million in one year, and to over $340 million in three years, says Graham. Its 1997 fees were $134 million, revenue that's tied to its work with longtime clients such as Caterpillar, and technology and healthcare clients that include heavies Dell Computers and Hoffman-La Roche, Inc., respectively.
Fleishman, based in St. Louis, will also grow its workforce from 1,400 to nearly 3,000 in the next three years.
FH Unfolds its New Face
Acquisitions might seem like the status quo when one considers the proliferation of M&As in this global economy. But for FH, it's a move that signals a plethora of activity and expansion.
FH - a traditionalist when compared with the likes of acquisition mavericks like Weber Worldwide - turned a new leaf in May when it made its first-ever acquisition, R. Duffy Wall & Associates, since it was founded in 1947. The firm is a 25-person lobbying boutique in Washington now operating under the FH umbrella but with its own brand name.
The D.C. office now is a core site for FH's energy, tax, defense and international work, according to Paul Johnson, GM of the office. It relocated from Connecticut Avenue to L Street, where its space has grown from 38,000 square feet to 45,000 square feet.
Taking into account FH's feverish growth mode, the D.C. office provides a textbook case of how Fleishman is netting high-profile publicity. It's vying with Ogilvy PR for a coveted account: the Office of National Drug Control Policy, which is earmarking an annual PR budget of $10 million for an anti-drug campaign for which FH is in the running. A decision is expected by the end of the month, sources say.
And consider that this news comes from a firm whose executives include veterans who don't want to disclose who they work for, but now openly admits that it's in the running to contract with drug czar William McCaffrey's office.
Buy-In and Bucks
Upper management will have another opportunity to peer into FH's plans during an Oct. 22-24 meeting with 1,000 of its managers in St. Louis. Graham will use these forums to fill executives in on what is planned for various geographic pockets and for recruitment. And its plans to acquire firms will again surface.
In addition to financial backing from Omnicom to make these acquisitions possible, the company is also cuffing an infusion of new talent.
Since January of this year, its New York office has grown 30 slots to about 127 staffers, says Jan Van Meter, who manages the N.Y. office as well as the Boston site.
Boston's newest hire is indicative of what kind of hard ball FH is playing when it comes to tapping into senior expertise. One of its three VPs is Karen Schwartman, formerly director of communications for Bankboston, who came on board Sept. 8. Bankboston is one FH's key clients managed from the Boston locale.
Also, in recent weeks in California (Los Angeles, San Francisco, San Diego and Sacramento). It increased the expertise in its offices through several notable hires. They include Carol Stogsdill, a former Los Angeles Times editor, who was named a senior VP in L.A.; Associated Press veteran Evelyn Cassidy who is a VP in San Francisco; and Steve Sugarman, a former deputy mayor, whose new name placard in L.A. reads senior VP.
That trio represents about 40 newcomers who have increased its West Coast presence (the Minneapolis office is grouped with the California branches) to about 140 more staffers than last year.
And Graham says recruiting those with equally impressive resumes will be business-as-usual in the next few years. (Bill Anderson and John Graham, 314/982-1700, St. Louis office; Paul Johnson, 202/659-0330; Jan Van Meter, 212/265-9150; Boston office, 617/267-9700; California office, 415/356-1000)