The PR industry sees FGS Global's sale to KKR as a strong signal about the importance of corporate and financial communications. WPP's sale of FGS Global to KKR is at an enterprise value of $1.7bn, and is the largest deal seen by private investors in communications. This raises the bar on the price communications commands, long considered priced too low for the value it brings to the brand reputation table.
Landmark Deal for the PR sector
A PR agency CEO commenting on the implications of the deal told PRmoment India, "It's a landmark deal in the PR industry given the multiple on revenue and profit. The WPP group has sold its prize jewel to a private equity firm and capitalised on the strategic communications capability of PR. It's a harbinger of the shape of things to come. We will see increased consolidation driven by private equity players which will build large and global PR platforms."
The FGS Global acquisition is a testament to the burgeoning strategic communications market," remarked Archana Jain, CEO of PR Pundit Havas Red. "While the deal is centred on financial communications, it sends a powerful message about the corporate sector's growing emphasis on effective and strategic communication. The size of the deal has set a new benchmark for the communications sector."
A senior agency professional who has seen several mergers in the PR sector analyses what the endgame for KKR could be via this acquisition. The agency professional says that with consultancy firms building communication capability to handle strategic reputation management, KKR could be interested in such an outcome from the 'punt'; by selling to a consulting or advisory firm.
FGS Global could also benefit from cross-selling financial communications to clients from KKR. The ticket size of that business is likely priced higher than that for general PR.
Experts assert that deal-making will be confined to corporate advisory and financial communications firms, saying that it's not easy to build multi-billion value from a people and services business like public relations.
Players in Financial Communications
Apart from FGS Global, other prominent corporate and financial communications firms in this sector are Brunswick Group, FTI Consulting and Teneo.
In India, Adfactors PR and Concept PR are two leading firms in financial communication, with Adfactors PR also being India's largest PR firm overall (also an independent firm) by a wide margin.
Earlier this year, former Sampark managing partner, Raju Kane wrote, "PRovoke Media's latest ranking puts Adfactors at number 60 among the world's top 250 PR firms with a fee income of 58,358,145 US dollars (approx. INR 485 crore). It is Asia’s largest independent agency."
Most large PR firms in India also have financial communications verticals.
KKR deal: An isolated phenomenon?
The agency CEO in India feels that "The KKR deal is not an isolated phenomenon but part of larger patterns happening in the United States and Europe. Beyond the private equity firms-law firms and consulting firms- are also adding PR and Investor Relations capabilities. For example, a global law firm, Dentons has invested in 2021 acquired public affairs firm in Europe, Interel."
Per a release by Dentons, "The addition of Interel extends the firm’s footprint in Europe, further strengthens the firm’s public affairs capabilities alongside Dentons Global Advisors Albright Stonebridge Group (Dentons Global Advisors ASG), and deepens the pool of expertise upon which clients can draw."
WPP to focus on general PR firms
WPP CEO, Mark Read, while announcing the sale stated that it, "Also provides WPP with greater financial and management flexibility as we continue to grow our core business including Burson and Ogilvy Public Relations which give our clients access to world-class public relations services.”
In January this year, WPP announced the merger of its two largest communications agencies, Hill & Knowlton and BCW, to be named Burson after the legendary late Harold Burson, a pioneer and founding figure of modern public relations and strategic communications.
This move is part of the overall simplification drive led by WPP CEO, Mark Read. The latest merger announcement follows the merger of advertising firms Wunderman Thompson and VMLY&R in October 2023, to create the world's largest creative advertising agency.
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