After decades of domination by the big publicly-traded holding companies (and Edelman), the public relations agency business is ripe for the kind of disruption that has shaken up adjacent businesses, from advertising to the media itself. In this series of articles, PRovoke Media founder Paul Holmes identifies some of the firms aiming to disrupt the PR market, and talks to some of the individuals spearheading that disruption.

First up, we talk with Lars Erik Grønntun, founder and chairman of Paritee Group, which has recruited a senior leadership team that includes former Weber Shandwick EMEA COO Jonas Palmqvist as chief executive officer, and made two significant acquisitions in Europe over the past two years: Nordic powerhouse Geelmuyden Kiese Group and—at the end of 2023—leading UK independent Brands2Life (which also has a small operation in the US).

Paul Holmes: Tell me a little about your background before you came into your current role.

Lars Erik Grønntun: I came out of Norwegian politics at a young age. After a big political fight over EU membership, II left the party and figured I would start my own business. The PR industry was then in its infancy and after a rocky start we eventually got the hang of it and went on to become the largest agency in Norway, Gambit, which was sold to WPP and became part of Hill & Knowlton.

I did my earn-out and stayed on with expanding remits: Nordics and CIS, half of Europe, all of Europe, EMEA and finally as global president  until 2020, and then went on to take on the COO/CMO role at [hame based learning platform] Kahoot!, a company I had invested in previously, helping to navigate the company´s strategic and M&A agenda, including seven acquisitions, then in 2023 we sold to Goldman Sachs Asset Management.

PH: What did you see during that time that convinced you there was an opportunity to build something new and different?

LEG: Coming from an entrepreneurial background but also having spent a large part of my career in the large holding companies I have one foot in each camp. I have seen the benefits and the limitations of both, and Paritee´s ambition is to create the best of two worlds: the entrepreneurial drive and proximity of the local agency, with the reach, investment capabilities and development opportunities of the larger networks.

I believe there is room for a “third way”, bridging the local with the international, but it has to be on a committed basis with real skin in the game from all involved; I have never seen loose affiliations without equity produce anything meaningful. I also want to avoid what most of the holding companies do with excessive centralization overhead costs and bureaucracy.

PH:  How will what you are building now be different from the existing market leaders?

LEG: I don’t necessarily buy into differentiation as the only strategy. There are tons of law firms, management consultants and accountants that deliver identical services and thrive doing so. I am more focused on what has the potential to be an effective business strategy than communications jargon about differentiation per se.

Where I do believe we differ is in our respect for the local market context. I come from a small market and I know how vital it is to succeed in your immediate context to be relevant outside your context. As a buyer you want the best agency in each market, not just the best at HQ level and mediocre elsewhere. We are local first, as I believe that ultimately creates the best offer also to multi-market clients. Local-first together with strong sector focus and not trying to be jack of all trades, but offering a set of distinct high-value services across a select set of key geographies, a semi-narrowed set of offerings, and the combination of this I believe can provide a foundation for a strong business over time.

PH: Tell me a little about Explore Equity, their vision for the communications business, and what makes them the right partner for Paritee.

LEG: Explore is a mid-sized growth equity firm focusing on professional services in the Nordics and in Europe and the UK. Their experience with professional services was key to us when partnering as they understand the dynamics of people businesses. The two principals both have long term careers from management consulting (BCG and McKinsey), so they know agency life and what makes an agency successful.

Our roles are clear, we are the industry experts, they are the financial experts, but having a partner that understands professional services makes it much easier.

PH: What made the firms you have acquired so far attractive to you? And what will you be looking for in any future acquisitions?

LEG: We have been clear from the inception that we are looking for what we have dubbed “national champions” when entering a market. National champions are agencies with a proven track record, long-standing client relationships, a strong brand name, sound financial performance, and the need to be well plugged-in in the market where they operate, with a strong reputation and scale.

For market entry we will be looking for agencies with the same qualities that we found in Geelmuyden Kiese and Brands2Life. For potential secondary acquisitions we are more agnostic—the guiding principle being that they bring some sort of strategic value to complement our existing offer.

B2L and GK are both state-of-the-art, scaled agencies, top teams and strong cultures, well reputed, strong in important sectors, with solid fundamentals—and they have both shown resilience under the wax & wane of the industry cycles through the years.

PH: Are there disciplines outside the traditional public relations business that you anticipate joining the Paritee family?

LEG: We are focused on public relations and tech solutions that logically and tangibly support the public relations practice. Having spent my career in PR and lately in tech I think we’ll stick to what we know. I am sure that there are other people better suited to own and operate agencies in adjacent industries.

Also, my view is that public relations in its nature manages all sorts of stakeholders with all sorts of channels and tactics - with a focus on business outcome for clients, meaning it is a multi-discipline in and of itself. From a perspective of “disciplines” I think the industry is already spanning a lot.

PH: What is your strategy for talent retention? Do you expect agency founders to stick around for the long term and how will you incentivize them to do so.

LEG: Essentially we offer a “partnership deal,” meaning our transactions are not buy-outs, and selling founders in most cases will also be reinvested into Paritee and incentivized directly on their own business performance as well as at Paritee level going forward.

We work with the founders to figure out what the best way forward is, for them and for the agency. We have the luxury of tailoring a solution to any given set of circumstance as long as we end up with a solution that works for everyone involved.

But it will likely be different for different companies. For Geelmuyden Kiese the original founder left after about a year, in an amicable and agreed way, and others then stepped up. For other sellers there might be significant opportunities under Paritee in years to come. Sarah [Scales] and Giles [Fraser of Brands2Life] are both top industry leaders, very impressive individuals and have built out a strong leadership team across the business. We are hugely grateful for their contribution and continued commitment to the business and see B2L as a cornerstone in Paritee.

A key part is always going to be to look further into the organizations on top performers and those with potential to develop and prosper with expanded responsibility

PH: What is your strategy for integration? Will Paritee operate as a family of brands, will you look for opportunities to cross-sell, or do you expect the firms you’re buying to come together under a unified brand at some point?

LEG: Integration for the sake of integration is one of the pitfalls we hope to elegantly skip. We’ll take the steps that drive client value and growth, the others we’ll cautiously consider when and if relevant. In my experience the effort that goes into integration is underestimated and the synergies are overestimated.

Again, I´d like to avoid what most of the holding companies do with excessive centralization, overhead cost and bureaucracy.

PH: What are the areas of investment that you think are crucial for an agency business to invest in as societal and technological changes shift the future of the business?

LEG: It is always going to be people.

However, generative AI is going to change how we perform the work and the work itself. With something that is evolving at the speed of AI, I don’t believe that long-term plans and large investments are the way to go. The best strategy as with any new technology is to play around with it and see what works and is commercially viable.

Also, after having operated in tech for a few years where AI is put to real use and fully integrated into the tech stack I see the value of partnering with the locomotives of the tech industry rather than attempting «go-it-alone» proprietary-built solutions. The latter could easily be lethal to your capex budget…

PH: Finally, is this a long-term agency-building project, or do you anticipate reaching a certain size and scale and then shifting from buyer to seller?

LEG: With institutional investors on the cap table, there will always be a certain timeframe to relate to for parts of the ownership, while the managing team have a different and committed long-term perspective. There will be changes in ownership as new companies join, as founders leave, as new partners become equity partners.

I am looking more at this as a long-term play but with dynamic ownership where those that contribute over time increasingly take part in the value creation.