There are more pr firms with annual fees of under a million dollars than most people realize. There are two primary categories: small firms that are recent start ups by pr professionals who got the entrepreneurial itch. And those headed by more senior practitioners who have headed their smaller firms for a number of years but never achieved greater critical mass.
Firms headed by senior practitioners make up the greater percentage of small firm ownership. And these pr pros are finding new life in the pr agency world rather than being put out to pasture because of their age.
Larger agencies, and I don’t necessarily mean giant agencies, are striking deals with these senior pros to bring both their long time valuable professional experience as well as their book of business into their organizations.
For the larger agency absorbing a smaller business it’s an opportunity to get into a new niche or a complementary one and generate greater critical mass. If the larger agency is seeking to sell in the near future it’s a means, also, to generate a greater purchase price.
For the senior owner of the small agency it’s a means to jump starting a career and becoming an important player in a larger firm. The pr agency industry is changing dramatically. There are more mergers and acquisitions taking place this year than at any similar time during the past ten years. Critical mass and consolidation seem to be the order of the day.
Until recently, smaller agencies – those under $1 million in net fee income – were largely ignored by larger buyers. But once the trend of buying pr businesses extended to firms well under $10 million in net fee income, the magnifying glass extended to the smaller agencies.