Private equity interest in communications firms is growing
Add Axios as your preferred source to
see more of our stories on Google.
Strategic communications firms are cash cows, and private equity firms are grazing on them.
Why it matters: Specialist firms with deep client relationships — and contracts — are attracting more investment dollars.
The big picture: The capital needs for comms firms is intensifying as client demands expand into culture wars, geopolitical unrest, fragmented media, heightened regulatory scrutiny and the rise of artificial intelligence.
- The growing list of issues has allowed these firms to form sticky client relationships, charge high fees and keep overhead costs low.
- That mix makes strategic communications firms particularly appealing to private equity investors, says Clayton Young, director at investment banking firm Houlihan Lokey.
State of play: The number of private equity deals in the space has more than doubled to 146 in the last five years, according to LSEG. The total value per year peaked at $4.8 billion in 2021 and has since trended lower.
A few examples ...
- Teneo sold a majority stake to CVC Partners in early 2019, valuing the firm at $700 million. Copley Equity Partners followed in early 2020 with an investment in financial comms advisory Gregory FCA.
- In 2021, Hamilton Place Strategies (now Penta) sold a majority stake to Falfurrias Capital Partners. Brunswick Group sold a 10% stake to BDT Capital Partners.
- The following year, O2 Investment Partners invested in BerlinRosen (now Orchestra), Coral Tree Partners invested in Subject Matter (now Avoq), Firehouse Strategies secured an investment from Semper Fi Partners, WestView Capital invested in Purple Strategies and Shamrock Capital invested in HighwirePR.
- Bully Pulpit Interactive (now Bully Pulpit International) secured an investment from Broad Sky Partners in 2023 and KKR secured a 30% stake in FGS Global, valuing the firm at $1.4 billion.
Yes, but: It takes a certain kind of investor to go in on comms firms. The slash-and-burn, cost-cutting mentality that private equity traditionally carries out may not apply in a workplace where the talent is the product.
- "The key asset of every strategic communications firm is its people, so the PE firms that have gotten into this space are ones that are thoughtful and sensitive about this," Jonathan Rosen, CEO of Orchestra — which has made six acquisitions thanks to PE capital — told Axios.
What to watch: Future private equity money is likely to flow toward firms that are investing in new capabilities, specialized practice areas, AI-supported tools and measurement capabilities.
The bottom line: Private equity firms follow the money, and right now, the cash herd is running toward strategic communications.
Go deeper: Private equity strikes again: Narrative Strategies sells stake
