Rick Gould, CPA, J.D., is managing partner of Gould+Partners, a New York-based management consulting firm specializing in PR and PR mergers and acquisitions. Gould will be a guest speaker at our April 27-29 conference in Dallas, where he will delve into multiple issues relevant to PR firm owners and C-level executives. The Dallas host committee recently spoke with Gould about what he has in store for meeting participants.
PRGN What will you focus on during your work session?
Rick Gould: I’ll discuss and provide best practices for how smaller PR shops and boutique firms can boost their profitability, valuations and utilization. It starts with explaining, in detail, the mantra that I’ve been preaching to PR firm owners for years, which is to run their agency “as if” they’re eventually going to sell. Even though the owner may have no intention to sell, possessing an “as if” mindset enables owners to pivot their thinking into running their firm as a business (rather than a lifestyle firm) and having a better antenna for how to monetize their PR services. I’ll also provide insights regarding the industry benchmarks that Gould+Partners created and PR firms should adopt in order to grow both their top and bottom lines. Within this context, I will also focus on the opportunity for PRGN members to be buyers of other agencies, and how to use strategic acquisition as an agency-growth strategy.
PRGN: Will you be able to dig into the top challenges these days for both buyers and sellers of PR properties?
Rick Gould: You bet. Understanding the buyer and seller dynamics are important, no matter which side of the equation you may occupy. I’ll examine what makes a good cultural and financial fit for buyers of other PR agencies. I’ll also talk about the most important financial indices that buyers need to focus on to ensure a successful sale and prevent any buyer’s remorse. Hint: It’s a lot like dating. Looking at purchasing as a growth strategy, though, requires a solid understanding of how PR firms position themselves for a sale, in terms of what they need to do from a financial perspective to make their asset more attractive to potential buyers.
PRGN: For owners of smaller and boutique PR firms considering a transaction, what are the top priorities for key executive retention?
Gould: It’s understandable if owners think the next in command is the COO or the CFO, for example. But when it comes to a successful sale, it’s a strong No. 2 on the seller’s side who will play the most significant role. This could be a general manager or a group director—a senior and seasoned PR professional who the owner is confident can take the firm to another level once a sale is complete. Given multiple responsibilities associated with growing the PR firm, the selling agency’s No. 2 should qualify for phantom stock, or “contract equity” in return for what she or he brings to the table. As part of receiving phantom stock/contract equity, you should require the inbound No. 2 to sign a restrictive covenant and/or non-compete agreement. This is mutually beneficial for both parties. It incentivizes the No. 2 to remain with the firm for the long-term and makes the firm’s new owners feel more secure in delegating major/new responsibilities to the No. 2.