What We’ve Learned After Four Years of Investing in Communications Consultancies

We started FHS Capital with a simple premise – to find smart, talented and entrepreneurial firms whom we could invest alongside of and help grow. In our conversations with Chief Communications and Corporate Affairs Officers, we consistently heard of the need for high quality advisors and boutiques, with a strong niche and deep expertise, and who know their swim lanes. We launched a company to identify, invest in, and partner with these kinds of experts.

The journey has been more challenging than we expected. Over the past four years we’ve researched, interviewed and kicked the tires with more than 50 potential opportunities, and have invested in seven.

Some of the teams we met had deep, credible, and valuable expertise, but we felt lacked the drive, charisma and savvy to grow a business. Some were engaging and driven but lacked a differentiated offering or compelling value proposition. Some had great ideas, but no real experience in growing or running a business. And some had everything we were looking for, but the timing wasn’t right, or the terms didn’t work.

In the end, our investment decisions rested on three critical components: the people, the premise, and the chemistry.

Let’s start with the people. Between the three founders of FHS, we have more than 100 years of experience and relationships in this industry. The majority of our deal flow has come through personal referrals from sources we know and trust, and who’ve had direct experience with the firms or people they referred. We realized early on that whomever we chose to invest in would be representing our own personal reputations, and that the character of the individuals, as well as the integrity of the firms, had to be of the highest caliber.

Once we were comfortable that the right people were in place, we took a hard look at the service offering. Was it unique? Was it in demand? Was it easy to understand? Was it compelling? And perhaps most importantly, was it relevant? With the radical transformation wrought by technology, polarization and activism, there has been an explosion in demand for new services in the marketplace. We’ve seen more change in the communications industry in the past three years than the prior 30. Research from McKinsey posits that Covid alone has accelerated digital transformation by seven years, not the least of which has been manifest in how and where work gets conducted. We want to invest in firms that can help companies cope with this transformation.

Finally, the most elusive element in our equation has been chemistry. FHS is a strategic partner, meaning capital is only part of our value proposition. We also invest focus, energy and relationships to help our portfolio companies grow, which means we will be spending a lot of time together. If the chemistry doesn’t work, if the collaboration is strained and the trust is not implicit, then the partnership will not succeed.

Our journey to date has been exhilarating and rewarding. It has also been enlightening. And we look forward to continuing to share it with you.

Bob, Bill and Don