Making Acquisitions in the Public Affairs Sector: Lessons from Both Sides of the Table
By Leigh Wedell
Acquisitions are often seen as a quick route to growth, but in the public affairs sector, it’s not just about adding numbers to the bottom line—it’s about finding the right mix of expertise, leadership, and culture. Having led acquisitions and experienced my firm being acquired, I’ve learned firsthand what works and what does not when merging firms in the unique field of public affairs, which is more relevant than ever as we go through a global geopolitical reset.
Understanding the Public Affairs Sector
The global public affairs market is estimated to be worth over $40 billion annually. This figure reflects a broad spectrum of services, including government relations, regulatory and policy advocacy, and strategic communications that help businesses, nonprofits, and other entities influence public policy and opinion.
Even the term public affairs has many different interpretations: if you work for the government, it’s the press office; if you work for a public relations firm, it means communicating politics or policy. Public affairs is more than just communications; it’s about engaging with the complex world of government relations, policy advocacy, and designing a blueprint to build relationships with the stakeholder landscape. The firms that focus on stakeholders and lobbying will often use the terms public affairs and government relations interchangeably. No matter how you define it, public affairs should be integrated into and supportive of a firm’s overall business strategy.
Increasing regulatory scrutiny and a constantly shifting political landscape put public affairs firms in high demand as CEOs look to mitigate political risk, one of their top concerns in poll after poll. There is a big opportunity in the sector as there isn’t a dominant player or a “Big 4” like there is for accounting or public relations. This makes the sector ripe for consolidation. Strategic acquisitions can be a powerful way to expand capabilities, but only if approached with a clear vision and meticulous plan. The sector's complexity means acquisitions often come with a high risk of failure.
The High Stakes of Acquisitions: Why Many Fail
Studies have shown that up to 90% of acquisitions fail to achieve their intended strategic objectives. In the public affairs sector, a high failure rate often stems from misaligned cultures, poor integration strategies, or an underestimation of the complexities involved in merging firms that operate on relationships and expertise. Success in this sector isn’t just about adding revenue; it’s about how well the new entity can leverage the existing firm’s operations, retain key talent, and preserve client relationships.
Case Study: Transforming an Add-On into a Standalone Leader
Our Objective:
Our team was tasked with consolidating a supplementary public affairs offering within a leading public relations firm and turning it into a global public affairs powerhouse. The goal was ambitious: build a recognized brand, broaden expertise, and elevate the firm’s strategic services beyond stakeholder mapping and communications. To meet a lofty revenue target of tripling the business in five years, we set our sights on acquiring top-notch government relations firms in key markets—filling expertise and leadership and scaling revenue swiftly.
Our Approach:
We started by identifying which markets growth was coming from in the public affairs landscape. In the U.S. and European Union, the industry is well defined, but in Latin America and the Middle East, the industry is nascent but burgeoning. As a result of our comprehensive gap analysis, Brasilia and Brussels emerged as essential targets—regional capitals that were crucial for the expansion of a global firm but lacking our presence.
We set about mapping the players in the market and getting a sense of what the average size was for established firms with a strong base of revenue, international clientele, and some operating experience. We also looked at specific sector expertise that was light in the existing organization. Leveraging our global network, we identified and approached acquisition targets that fit our criteria.
In our early discussions, cultural and philosophical fit was paramount; if the firms didn’t align with our values from the outset, further discussions would be off the table. Once we had our candidates, we set about the fundamentals of the negotiation by assembling a cross-functional deal team, pulling in expertise from the public affairs unit, finance, human resources, legal, and IT.
We aimed for consistent and detailed communication at every level, with every impacted part of the business, and among the various teams. Deal trackers were set up on shared drives and big and small team calls were routine. In the center of it all, was a core team of less than five people who served as air traffic control moving the negotiations forward and organizing communications. This ensured every aspect of the integration was managed with precision.
Our Impact:
We achieved our acquisition revenue target in under two years by simultaneously acquiring high-caliber boutique firms in Brasilia and Brussels. Beyond expanding our footprint, these acquisitions bolstered our leadership team and introduced deep expertise in critical sectors, contributing significantly to the firm’s growth. Today, those acquisitions are not just regional hubs—they’re core components of the firm’s global offering.
Overcommunicate
Having been on both sides of the table, we learned that acquisitions in this sector are inherently about aligning clearly with expectations, engaging people on both sides of the deal table, and making sure everyone is at least heard. We found that we could not overcommunicate. These deals were time intensive and required a personal touch. Yet no matter how much time we invested in communications, not everyone bought in. But we found if even the most vocal critics and detractors were heard and “in the know”, they would eventually be at peace with the deal – if not supportive.
Therefore, the key to our success was in focusing on every person involved, both from the acquired and acquiring teams. Public affairs is a people-driven business; without the right team composition, systems, and culture, even the best financial deal will falter. Get the people part right, and the rest can be worked out.
Key Takeaways for Acquisitions in Public Affairs
Identify Strategic Gaps: Begin with a clear understanding of where growth opportunities lie and what’s missing from your current capabilities. This will help in targeting the right firms that complement your business rather than just adding revenue.
Cultural Fit is Critical: Assess potential partners not just on what they can add to your bottom line but on how well they align with your firm's vision, values and work culture. Culture clashes are among the top reasons acquisitions fail, especially in a sector as relationship driven as public affairs.
Build a Cross-Functional Team: Integrate diverse expertise—finance, legal, HR, and IT—to handle the complexities of the acquisition process. A multi-disciplinary approach ensures that all aspects of the merger are thoroughly vetted and managed.
Focus on People First: The real success in public affairs lies in how well you manage and integrate the human element of the acquisition. Retaining talent, maintaining morale, and ensuring a smooth transition are crucial for keeping clients and employees engaged.
Be an Armchair Therapist: A colleague of ours is noted for saying, “Everyone likes change, until it happens to them.” Most people are excited about the deal in theory, but when it comes to how it will impact them in practice – whether it will expand or contract their empires – it becomes deeply personal. This is where empathetic leadership becomes critical to deal-making. We found that even the most vociferous detractors eventually accepted or came to peace with the new order if they were consulted. If you can find a few tweaks to the deal to demonstrate their importance, such as a title adjustment or compensation bump, all the better.
Acquisitions in public affairs require a strategic blend of vision, detailed planning, and a relentless focus on people. When done right, they can transform a business, creating value that extends well beyond the initial deal.
