A Different Way to Think About Agency Acquisitions

One of the most deeply rooted assumptions in public relations agency M&A is that an acquisition is an all-or-nothing proposition. Buyers typically insist on acquiring 100 percent of an agency, assuming complete ownership and control from day one—or they simply walk away.

For many agency buyers, that approach seems perfectly logical. If they're going to invest millions of dollars, they want complete control over the business they are buying.

But what if that assumption is causing buyers to miss some of the industry's most attractive acquisition opportunities?

Agency owners are entrepreneurs. They have spent years—often decades—building their firms from the ground up. While many recognize that a strategic partner could accelerate growth, expand capabilities, and create greater enterprise value, they often struggle with one fundamental issue: surrendering complete ownership and the independence that made their success possible. The prospect of suddenly reporting to someone else, losing control over their culture, their people, and their vision is frequently what prevents otherwise compelling transactions from ever reaching the finish line.

Ironically, this all-or-nothing mindset can deprive both sides of significant value. Buyers may lose the opportunity to acquire exceptional firms whose founders would eagerly embrace the right partnership—provided they can continue leading the businesses they created. Sellers, meanwhile, may forgo the resources, scale, and market opportunities that a larger strategic partner could provide.

Perhaps the better question isn't whether a buyer should acquire an agency—but whether the buyer has to acquire all of it immediately.

Sometimes the most successful acquisition begins with something less than 100 percent ownership.

Few examples illustrate this better than the partnership between Michael Kempner of MikeWorldWide and Ron Berkowitz of Berk Communications. Rather than insisting on a full acquisition, Kempner acquired a 60 percent interest in Berk Communications while allowing Berkowitz to remain in control of the agency he had built. Over the next decade, the partnership generated substantial growth for both organizations, expanded their combined capabilities, strengthened their competitive position, and ultimately led Berkowitz to enthusiastically sell his remaining 40 percent ownership interest.

Had Kempner insisted on acquiring the entire company at the outset—as many buyers would have—the transaction very likely would never have happened. Instead, by structuring the deal as a phased partnership rather than an immediate takeover, both firms created far more value together than either likely could have achieved independently.

That is the story explored in the latest episode of PR Masters.