Doing It the Right Way - 2nd Edition: 13 Crucial Steps for a Successful PR Agency Merger or Acquisition

By Rick Gould CPA M.S. J.D

Few PR professionals fully understand the process of mergers and acquisitions as it applies to the PR industry. This can cost them dearly when the time comes to buy or sell. In Doing It the Right Way, managing partner for M&A consulting firm Gould+Partners Rick Gould offers a step-by-step examination of the M&A process. In this book, you’ll learn how to: Create value in your company Evaluate the worth of potential acquisitions Understand what sellers want Determine what buyers need to see Manage mergers and acquisitions from start to finish Written with the newest generation of PR professionals in mind, Doing It the Right Way is a valuable addition to your entrepreneurial toolbox. Learn to navigate the pitfalls of the M&A process as you discover how to maximize company profitability and value building opportunities. It’s time to consider your succession plan. Are you ready for what comes next?

• Language: English
• Publisher: Lulu Publishing Services
• Release date: Jun 3, 2019
• ISBN: 9781684701995

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J.D.

Copyright © 2019 Rick Gould, CPA, M.S., J.D.

All rights reserved. No part of this book may be reproduced, stored, or transmitted by any means—whether auditory, graphic, mechanical, or electronic—without written permission of the author, except in the case of brief excerpts used in critical articles and reviews. Unauthorized reproduction of any part of this work is illegal and is punishable by law.

This book is a work of non-fiction. Unless otherwise noted, the author and the publisher make no explicit guarantees as to the accuracy of the information contained in this book and in some cases, names of people and places have been altered to protect their privacy.

ISBN: 978-1-6847-0200-8 (sc)

ISBN: 978-1-6847-0199-5 (e)

Library of Congress Control Number: 2019904509

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Any people depicted in stock imagery provided by Getty Images are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Getty Images.

Lulu Publishing Services rev. date: 05/07/2019

Widespread Praise for Rick Gould

As a 100 percent employee-owned company by virtue of an employee stock ownership plan, it was critical that the plan’s independent trustee understand the deal structures typical in the public relations space. Rick’s knowledge of and commitment to our industry is unsurpassed in the financial advisory arena, so seeking his help on this was an easy decision. His published research, along with his offer to spend time with our plan’s trustee, greatly contributed to a successful transaction all around.

—Lynn Casey

Chair

Padilla

Minneapolis, MN

The acquisition of SHIFT was an important milestone for our firm. Having Rick Gould bridge the gap between both parties during the negotiation was crucial for the success of the transaction. As an adviser to the seller, he understood the importance of finding solutions that would not jeopardize the deal, that would provide value to his client and that would maintain a harmonious relationship between all parties postclosing.

—Royal Poulin

Executive Vice-President and CFO

AVENIR GLOBAL (Parent Company of NATIONAL Public Relations)

Toronto, Canada

I have worked directly with Rick and his team on several transactions. Rick is responsive and possesses a thorough knowledge of our industry. We talk the same language, and it provides win-win results.

—Peter Finn

Founding Partner

FINN PARTNERS

NYC

Rick has been an invaluable source of possible acquisition opportunities for our firm.

—Richard Edelman

President

Edelman

Rick provides the deep experience in mergers and acquisitions that most of us don’t have. From his participation in multiple transactions each year, he knew that G&S and CooperKatz were a solid match and became a cheerleader in making sure this deal got done. His perspective from start to finish was invaluable.

—Ralph Katz

EVP

G&S Business Communications

Formerly Principal & Cofounder of CooperKatz

NYC

To my son, Jason Michael Gould, twenty-eight, who had the drive and tenacity to return to college to get a degree in cybersecurity; my twelve-year-old daughter, Jaime Michele Gould, who as a star pitcher for her traveling softball team, NITRO, gives me inspiration to excel; and to my wife, Lauri, who has always supported me in the unpredictable but very rewarding building of my M&A advisory firm, Gould+Partners.

Preface

Counselors Academy Insights

For the past five years, I have been a speaker at the spring conference of the Counselors Academy, which is a division of the Public Relations Society of America. I presented in Toronto, Canada, in 2018; in Seattle in 2017, in San Juan, Puerto Rico, in 2016; Laguna Beach, California, in 2015; and Key West, Florida, in 2014. My ongoing topic is the M&A process. My involvement in the academy has made it clear that there is a changing of the guard occurring in the public relations (PR) industry right now. The academy has a younger average membership, with many attendees younger than forty years of age. Now the new breed of PR professionals is hungry to learn about how to achieve profitable growth and develop their teams for the future.

The main insight I gleaned from the Counselors Academy over the years? Most owners have no succession plan and run their firms purely by instinct.

Most owners have no method to monitor and control profitability. While most firms participate in my annual Best Practices Benchmarking survey and annual Billing Rates/Utilization survey, they don’t implement the steps needed to put this valuable intelligence into practice.

As a result, agencies don’t get the outcome they could have, which should be, at a minimum, 20 percent profitability. And these are the firms that are hungry for information and financial advice.

What about the thousands of PR firms in the United States and Canada that don’t attend Counselors Academy Spring Conference and don’t participate in industry organizations and seminars? These firms need guidance from the counsel most.

Regardless of whether you plan to sell your firm, understanding the mergers-and-acquisitions (M&A) process and following the steps in The Ultimate Public Relations Financial Management Handbook, fourth edition, (https://www.amazon.com/Ultimate-Agency-Financial-Management-Handbook/dp/1537317733) will make you a better, smarter, and savvier entrepreneur. At a minimum, you will see the results in your firm’s bottom line.

Why I Wrote This Book

I wrote this book to set the record straight and guide PR and ad-agency owners about doing it the right way.

Other publications and industry writings include misstatements and are not based on factual information about the M&A process. The many calls and e-mails I get requesting that I set the record straight inspired me to write the second edition of this book.

I decided to again self-publish this book so I could avoid a formal editing process and price it affordably in order to make it available to all firms, regardless of size. This book is designed for both sellers and buyers, as well as PR firms of all sizes, including start-ups.

I created Gould+Partners, the premier M&A Advisory firm, June 1, 2001. I started the firm with no clients, no staff, and a small office from the certified public accounting (CPA) firm that acquired my CPA firm. Sure, there was risk, very big risk, especially with the event of September 11 three months after I sold my secure, financially predictable CPA firm. However, every successful entrepreneur I have worked with has been a risk taker. I was no exception.

I got involved in M&A via acting as the CPA firm for prospective sellers in the PR industry. eighteen years later, I still do M&A on an ongoing basis, but I also have a thriving consulting business helping PR and ad firms improve profitability, build value and prepare themselves for an ultimate sale.

Foreword

Since 1980, the public relations (PR) and ad-agency industries have been two of the fastest growing marketing-communications sectors. Consolidation has been a major reason for such growth. If a consolidation is done correctly, it should benefit the firms, clients, employees, and investors.

Integrating Marketing-Communications Firms

This book examines the challenges and successes faced among buyers and sellers attempting to effectively combine and integrate marketing-communications firms. It will explore how value is created and how firms package themselves in advance (often commencing the process several years before a planned sale). The book also asks key questions for both sides of the table: What are the drivers for successful acquisitions? What must buyers do? What must sellers do? What is the role of experienced and competent advisers, including attorneys, certified public accountants (CPAs), merger-and-acquisition (M&A) advisory firms, and financial planners?

It’s important to note that this book is impartial, offering tips to both buyers and sellers from someone who has been involved in M&A for more than twenty years, first as the owner of a CPA firm specializing in the creative service industries and then as founder of the M&A firm Gould+Partners, the preeminent M&A/consulting firm specializing in PR and ad M&As.

Our benchmarking surveys and reports are the gold standard for the PR industry. Our seminars and writings have helped us to share our thirty-plus years of knowledge and experience in the management and consolidation of PR firms and ad agencies.

The Keys to Successful Transactions

What is the basis for selecting a merger partner? How do you time the transaction? How do you maximize value? The key is multifaceted.

To wit,

• the key is value creation;

• the key is merging cultures;

• the key is to create a best-place-to-work environment and culture by maximizing the intellectual and creative capacity of both seller and buyer;

• the key is to overcome the apparent risks in consolidation and the merging of cultures; and

• the key is not making your transaction a statistic in the failed-deal column.

The key is not selling as a distressed firm, such as a fire sale, but as a firm that’s growing and profitable, ready to capitalize on