ST. PETE, FLA., -While mergers, acquisitions, alliances and diversifications sometime scare even the best of PR agencies, such moves have become the new reality. But it's not the choice of which routes you embark on that will assure your operation's longterm security. Rather, it's careful planning.
PR execs attending the Public Relations Society of America Counselors Academy annual conference here were cautioned that there isn't any one formula that will guarantee successful growth into the millennium. The only sure bet is that merging, acquiring and allying is going to happen at a rapid pace and it is crucial to know which ones match your business philosophy.
Thomas Hall, chairman of Tampa-based Tucker Hall, warned attendees that most acquisitions (excluding those involving leading, deep-pocketed holding companies buying companies as investments) -which are surfacing as a trend in the PR business culture -mirror what happens in the business world at large and don't work.
Hall, whose company recently queried CEOs at 600 of the nation's fastest-growing companies, said close to 65 percent of mergers and acquisitions fail. But Hall said that in this climate of "merging and purging," the company did discover that of the more than 300 growth strategies, there were five specific categories (which surfaced during the proprietary probe) that appear to lead to successful growth. They are:
- Differentiation, which focuses on making sure there is a clear distinction or separation between you and your competitors;
- Good Implementation in short, executing business practices "better than anyone else," including forming strategic partnerships;
- Acquisitions, which can involve buying smaller companies or "marginal performers" and consolidating services;
- Focusing on people, which means reinvesting in your employees through training or profit sharing; and
- Opportunistic growth, which can entail expanding during recessions and reviewing revenue trends in niche markets.
But Hall also advised PR counselors, during the "Leading Your Firm for Growth" breakout session, that PR professionals need to research and test business methods something he said isn't done enough in PR. And in pointing out that there isn't one surefire way to guarantee successful growth, Hall reiterated that the five outlined categories (referred to above) are the "single lasting strategies" that surfaced again and again during the growth survey.
On analysis, what's key to all of them is their tie-in to how growth is managed not pushed.
Case in point: Maureen Blanc, president of San Francisco-based high-tech PR house Blanc & Otus, said that even though the PR industry is burgeoning and the opportunity for new clients is immense, successfully growing a business has everything to do with timing.
Ironically, in an industry in which PR professionals can be fairly secretive about lost accounts and client dealings, Blanc spoke candidly about "mistakes" the $7 million company has made since it was founded 12 years ago.
Blanc said that five years ago, Blanc & Otus was at a crossroads and execs were trying to determine whether it would stay a boutique or propel the 45 percent annual growth it was experiencing.
The decision? To push for more growth by upping its staff; revamping its computer system; changing its accounting system; and setting up a Web site. But shortly after doing that, Blanc said, the company lost its key client, Sybase, and "$2.5 million in revenue went out the door" because of a change in Sybase's management.
But Blanc said that Blanc & Otus was able to eventually replace that revenue by attracting mega companies IBM and Adobe and the business continued to grow its client list in a somewhat "Rambo" style. Then it, too, lost those two major accounts.
"We looked at each other and said, 'What are we doing?' " Blanc recalled. She said that execs at the business had been told by their clients that company staffers seemed "distracted" and that they were stretching their servicing of accounts too thin.
To remedy the situation, Blanc said company heads decided last August to freeze the agency and focus on fixing the problem. To do that, it took several steps, including increasing training for its staffers; establishing a quality assurance program; sending staffers off-site to get a better sense of what clients needed; installing an intranet to encourage employee communication; and looking for incentive programs to keep employees satisfied.
The problem in PR now is that the "demand outweighs the capacity," Blanc said, adding that she receives 10 to 20 inquiries a week from potential clients, most of whom are turned away.
Another speaker, J. Frederick Niehaus, president of PR company Intermountain Partners, Denver, told PR counselors that he's found that mergers are one of the "least hostile approaches" when it comes to growing a business. Part of the pre-merger planning, he said, includes a "courtship period" and striking a synergy with the other company by taking a think-tank approach and avoiding Machiavellian tactics.
"The single most important issue you will look at is the dissolution of ownership" and how the two operations come together, he said. A merger, he added, involves several issues -including avoiding diminishing the power of the core business operations; bringing two corporate cultures together; dealing with potential brand and identity losses; and working out management dominance issues.
(Tucker Hall, Thomas Hall, 813/228-0652; Blanc & Otus, Maureen Blanc, 415/512-0500; Intermountain Partners, Fred Niehaus, 303/534-5409)