For PR agency owners navigating today’s fast-paced world, keeping ahead of the curve requires more than just innovation. This is why many independent, mid-sized agencies like mine are making acquisition part of their multi-faceted growth strategy.
According to Dave Sheehan, Managing Partner at Athru Partners, “High-performing agencies (those growing 30 percent year-over-year) have found that adding M&A as one of the key pillars in their business development plans has been critical to accelerating growth.”
As the owner of an integrated agency in Chicago, I’ve come to appreciate the profound impact that acquiring other agencies can have on bolstering market presence and catalyzing growth. I’ve learned how a business-building tactic that had once been the domain of “big” agencies can also be employed by much smaller shops as part of a holistic growth strategy.
Below are some broad strategies to help guide agency owners who may be considering acquisitions in 2024.
Keeping balance on a shifting landscape
The PR industry is in a state of constant evolution, with emerging technologies, changing consumer behaviors and dynamic market trends perpetually reshaping the playing field. In such an environment, adaptability is key, and the strategic acquisition of complementary agencies can be the key to securing a competitive edge.
|This article is featured in O'Dwyer's Jan. '24 Crisis Communications & PR Buyer's Guide Magazine
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In an industry as dynamic as ours, standing still is akin to moving backward. You have to always be thinking ahead. When you look at your portfolio of clients, it’s not always easy to know which ones will stay and which will go.
Just as financial advisors often recommend a “diversified” approach to investing, the same principle applies to your client portfolio. You can instantly broaden your client base by acquiring the right agency business, diffusing the potential negative impact of any one client loss.
I’m habitually seeking growth opportunities and that includes strategic acquisitions to ensure my agency remains well-balanced and well-positioned for the unknown.
Building up your expertise
One of the best reasons for thinking acquisitively in 2024 is the potential for building expertise. Every agency has a unique set of skills, talents and core competencies. By strategically acquiring agencies with complementary strengths, you can supercharge your strengths in a way that makes you stand out as a leader.
A strategic acquisition can turn a core competency into a superpower via the addition of a specialized workforce. That might mean additional bandwidth to take on more of the work you’re good at or more brainpower to push the limits of what your agency is capable of.
Broadening your service offering
At a time when clients are increasingly in search of one-stop solutions, your breadth of services can play a critical role in client acquisition, retention and satisfaction. Acquiring agencies with specialized/supplemental skills can help you broaden your service offerings, providing clients with an expanded suite of solutions.
Clients today are looking for quality, efficiency and simplicity, which means finding partners who can seamlessly integrate numerous aspects of a marketing strategy. Acquisitions enable specialized agencies to evolve into multi-disciplinary solutions providers, meeting the evolving demands of the market.
With this in mind, first consider the things you’re doing well, then make a wish list of those services you’d offer your clients if you could. Seek acquisition targets with proven expertise in these areas to broaden your offering, then make sure everyone knows about it.
Expanding your geographic footprint
With the digital era eroding geographical boundaries, acquisitions can be a great way to establish a local presence in new markets, diversifying your client base and expanding your reach.
In a globalized world, having a localized presence can be the difference between winning or losing—or keeping or losing—a lucrative piece of business. Acquiring agencies in strategic locations not only opens new doors for new business but also enhances the agency’s cultural intelligence, a crucial factor in today’s interconnected marketplace.
But geographic expansion isn’t without its challenges. You can’t simply absorb staff from across state lines or begin servicing newly acquired clients from a distance. There will also be brick and mortar to operate, so you’ll likely need to hire a managing director to work on-site and help facilitate the integration of agency teams. But the long-term value in terms of market exposure can be well worth the work.
Anticipating changes in the market
As the marketing world evolves, agencies must change the way they function and position themselves. Over the past couple of decades, we’ve seen transitions from print- and broadcast-heavy campaign generation to an emphasis on digital/online marketing, and now to a social-first mindset. These changes can require significant restaffing and retooling to better meet our clients’ evolving needs.
Evolutionary operational refinements can be aided and expedited by strategic acquisition, buying the expertise you don’t have sooner than later and thereby positioning yourself ahead of the curve. Look at where the world is going. Anticipate the needs of your clients two or three years down the road. Evaluate your ability to meet those needs with the agency you have now. Any glaring gaps can represent areas for growth through acquisition.
Navigating challenges with experience
While the benefits of acquisitions are significant, it’s important not to lose sight of the challenges that can come with integrating diverse teams, cultures and operations. Successfully navigating these challenges requires a nuanced approach and expertise that can come only with experience. For those new to acquisitions, finding and relying on an experienced mentor, as I have, can make a world of difference.
One thing I’ve learned from personal experience with numerous transactions over the years is that the art of successful acquisitions lies in understanding the cultural nuances of the agencies you acquire and having a well-thought-out integration strategy. Acquisition expertise isn’t just about financial negotiations; it’s about fostering a collaborative environment that allows the strengths of each agency to shine.
Future-proofing your agency
Strategic acquisitions aren’t just about surviving, they’re about leading the change and charting a course for the future. Embracing acquisitive opportunities requires a blend of foresight, adaptability and follow-through. But in a rapidly evolving world where the only constant is change, thinking acquisitively isn’t just a strong business move—it could be a strategic imperative.
Kimberly Eberl is Founder and CEO of Motion, based in Chicago.