We are now nearly 18 months into 3 Monkeys | Zeno, born of the marriage of 3 Monkeys Communications and Zeno Group in the UK.
We courted closely, got hitched, had something of a hard-working honeymoon and are now happily getting on with life.
This morning’s PRWeek M&A breakfast event in London was a chance to share some of the things learned through the nuptials, and hear what others have experienced as communications business come together and work together.
Deputy editor John Harrington asked a panel of agency principals about the success factors, personal journeys, tips and pitfalls of agency acquisition and integration. There was some sharp and informative discussion, and I was glad to be able to chime in with perspectives on the 3 Monkeys | Zeno story, as well as my personal experience of selling and acquiring agencies, and doing MBOs.
Much of what was discussed is confidential of course, bound by Chatham House Rules, and rightly so. But here is a general summary of the main points covered, the primary one being that the human factors are always the most important in how these marriages fare:
- Understand personal aspirations and what people want out of life: agency founders all have different reasons for wanting to change the game and team up with others, so understand what they really think and feel as those factors are crucial to forming a strong business relationship
- Try to go on dates before getting married: 3 Monkeys | Zeno had a 12-month courtship, so the more that you can get to know each other before tying the knot, the better
- Momentum is crucial to mutual success: mergers and acquisitions tend to work best with good timing, when there is latent momentum and opportunity on both sides already
- A little overlap can be good: while the best marriages tend to bring complementary factors, some overlap can ease the integration and mutual understanding
- Joining the dots needs focus: it can take a while for the acquired company to start opening doors within a broader group, but focusing on the right introductions across teams and key personnel can expedite all of that
- Reputation matters: an obvious point of course, but agencies with a strong existing reputation can bring a magnetic effect to the combined organisation, and create some fresh market interest
- The ever-increasing professionalism of the PR industry is a big positive: it means that M&As can now be on a broader stage, with deals able to open doors to broader consulting and marketing services
- Expect the unexpected: both parties being utterly honest about how to deal with unforeseen issues and opportunities, and the way in which they would talk things through to resolve them, can be a good preparatory measure
- There is no substitute for personal relationships: yes operational plans are needed, yes deals needs legal and accounting advice, but people knowing people and being able to work together successfully tops everything
- Culture needs to be nurtured but must be central: bringing together two or more strong cultures needs empathy and focus, but doing so is both fundamental to M&A success and can create a far stronger agency or network overall
The UK in particular has seen a flurry of agency acquisitions and mergers in the past couple of years. The acquirers, merged entities, structures and rationale for doing deals in the first place are more diverse than they’ve ever been. Agency mergers need sharp commercial focus and guile. But above all, the human factors are by far the biggest ingredients of success.