Why Asian PR firms are eyeing IPOs
A handful of Asian PR firms are preparing to go public. Will their efforts reshape the industry's growth model?
The public markets are not especially popular with the public relations industry these days. Publicly-owned PR firms, dominated as they are by the giant holding groups, have underperformed overall market growth by a sizeable factor over the past decade. The reasons have been discussed ad nauseum, not least by me, starting with an indelible focus on short-term quarterly profits over long-term client and talent relationships. Private equity money has flocked to independent firms, which have outgrown their publicly-held brethren by a factor of 2:1 in recent years.
Even so, understanding why holding groups are public rather than private is not especially difficult. Access to capital is one of the primary benefits that a conglomerate structure brings to its individual agencies, and no matter how attractive the PR industry is to PE money, their investment levels pale in comparison to the pension funds. That’s the theoretical argument, anyway, even if that capital does not always find itself deployed to the benefit of publicly-held PR networks.
For an individual PR firm seeking capital, the options are well established. Sell to a bigger player, take on debt or maybe pursue a management buyout or some other form of employee ownership. Tried and tested methods all, but unlikely to bring in the levels of funding that might be available on public markets.
Perhaps you can see where this is going. Individual consultancies, by and large, have demurred when it comes to public ownership — largely because the risks and costs of an IPO have always been thought to outweigh the benefits.
