“A good PR consultant is worth the money ”
Wrote Luke Johnson, the serial entrepreneur and investor, in his column for the Financial Times.
Very sporting of him...
As an industry, and in common with pretty much everyone, we like to be valued. And we particularly like it when people who have extracted value from us tell other people.
When that person is Luke Johnson, a man with more experience than most at the helm of major listed business, private ventures, start ups and investment vehicles, we positively glow.
He stops (considerably) short of hailing us as a panacea; of course he's right. Equally, since he only has a little short of 700 words, he can't possibly cover all the positive ground I'm sure he would have liked to, but he does focus on some interesting points.
Just to look at one general point, I'll look at his praise for a PR consultant's connections and the recommendation that the buyer makes sure that their consultants understand the business they're advising.
Public Relations is a transferable skill. There are disciplines that apply to our art that make us valuable as "curators" of the message and as advocates for any business. But perhaps it is where a public relations consultant has real expertise in a particular industry that the maximum value can be extracted. It is then that connections can really be leveraged, connections which may include other industry leaders, industry specific media, regulators and of course, analysts and investors.
Sector expertise can be built partly through consistent exposure to an industry in an advisory capacity - and there are a number of excellent specialist public relations consultants that have always been public relations advisers or who came to public relations via investment banking or other advisory roles. But expertise can also come from having worked in an industry and becoming familiar with its workings, its terminology, its drivers and influences - from the inside. Consultants who have come to public relations as a second career can use their previous experience to their own and to their clients' benefit by adopting some measure of industry focus.
Peter Rigby, December 2010
New filing raises old problems
Matthew Longbottom, Account Director, comments on the December filing against Ernst & Young by New York state prosecutors over its work for the now collapsed Lehman Brothers....
" this raises several important issues that have been debated in the accountancy industry for some time: the varied use and interpretation of accounting rules, limits of liability and the dominance of the Big Four.
The problem is, as every accountant knows, that there are lies, damn lies and audit reports. By stretching financial regulations, often following them by the letter rather than by their spirit, it has been shown to be possible for a firm to effectively mask its fiscal situation. In the Lehman case, a perfectly legal accounting method, Repo 105, allowed $50bn to be kept off the balance sheet at the second quarter of 2008. The courts will need to decide if it is the financial regulation itself, or the extent of its use, that is questionable. KPMG and PwC, who have used Repo 105 in the accounts of Citigroup and Bank of America respectively (both of whom needed bailing out by the US Government), will be watching closely.
Large accountancy firms have large pockets and it is likely that a settlement will eventually be agreed. The financial liability of an accountancy firm is a contentious issue. When the firm Independent Insurance collapsed, the liquidators launched a law suit against KPMG for £300m. The case was eventually settled out of court, but the large numbers involved give an indication of the effect substantial court cases could have on firms outside of the Big Four. Last year Grant Thornton and BDO had turnovers of £380m and £312m respectively. A lawsuit costing hundreds of millions of pounds could seriously undermine most accountancy firms. The industry as a whole therefore would prefer limited audit liability, as this would help protect firms of all sizes from inflated claims. The argument against this is that it could soften the bite of litigation and regulation for the larger firms in particular, and that accountants should not be protected if they are at fault.
Having spent years in the industry, at a Big Four and other accountancy firms, I have a keen interest in the history of the sector and an acute awareness of how a firm's reputation affects its bottom line. Until 1987 the accountancy landscape was dominated by the Big Eight. Then it became the Big Six, then five and now four. With the memory still fresh of Arthur Andersen's collapse in the wake of Enron, there is a fear that the industry might become the "Big Three" before it grows to the big five or six again. Ernst & Young is a powerful player in the audit market however, and due to the significant repercussions that the collapse of another major accounting firm could have, it is unlikely that the New York prosecutors, or any party involved, will want to cause E&Y to follow Lehman in its demise.
The E&Y case is highly unlikely to result in all these issues faced by the accountancy industry being resolved. It would be a good thing however if the case brought further clarity to these areas especially the use and interpretation of accounting regulations, a point the case is likely to focus on. Auditors provide an essential service to companies and shareholders and if this can be refined and improved then it will ultimately be a good thing for the industry."
Matthew Longbottom, February 2011
Haggie shows way to handle conflict
In his article published in PR Week, Anthony Hilton highlighted the challenges sometimes faced when deals involve more than one client..
Read more here
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