Welcome everyone to our capital markets day. It's the first one we've had since we've been public. All of you know, I think, since you accepted the invitation, that we are PPHC, which, if you parse those letters, stands for Public Policy Holding Company. I have one piece of business I have to take care of before we start. First off, many of you have seen this before. Here's a disclaimer. Please read every line of it. Commit it to memory. There'll be a quiz at the end. Also email my general counsel and tell him that I took care of my obligation. Thank you. It's interesting, I saw this statement the other day, and I guess it's always kind of been burned in our memories.
When I looked at it and I realized that it was pointed out to me that this was actually in some of our listing documents and materials when we went public three years ago. I ask you to pay attention to it, because it really does summarize where we are today, especially after the acquisition announcement that we made Monday. That was our goal from inception 10 years ago, roughly a little over 10 years ago now, was to be the preeminent strategic communications government relations provider by uniting a diverse group of leading specialists around the world for collective success for our clients, employees, and shareholders. What does that really mean in translation?
It means that we've had from the beginning, the vision that we were not just going to be a consolidator of government relations services worldwide capabilities, geographies, and talents, but also that we understood the interplay with corporates. That it wasn't just the political audience they needed to address. They needed to, in a cohesive fashion, address the corporate communications audience, which concentrated on the public image and the branding, and most importantly, the reputation of companies, meaning crisis, et cetera. These two worlds were colliding in a digital universe and needed to be brought together. You'll see a lot of this as we go through this today as to how as we run our company, we actually try to put together complementary pieces rather than be a typical holding company, which just adds duplicative assets and keeps them with a separate name.
Again, we'll show you a lot about the construction. My main presenters that are with me today, and also three of our fabulous CEOs, plus our newest chairman of the firm are with us today. I'll let them introduce themselves when they have the panel discussion later. I'm Stewart Hall. I'm the CEO. I'm joined by my able CFO, Roel Smits, and my equally able Strategy Officer, Thomas Gensemer. We're the oddest collection of people you will ever see. We're all from different places, different backgrounds, but it's amazing what we've done together, and I rely on these guys a lot. We all had a common WPP background. Some of you will have differing opinions of that place. We took the good from there and we thought we took some of the bad that we learned and tried to correct it this time around in building this.
Very instructive experiences we shared. Quickly, just the things I want you to take away from this today, if you can. The first thing is that as a company that operates in a communications space to a large degree, even when we deal with policymakers directly, we're really communicators, that we're not interested in selling soup. We're not interested in products and consumer. We are looking at the high-end, human-centric advisory space, which can offer strategic comms, lobbying, and public affairs. The first thing is, when you look at our margins, there's a reason for that, because we're not going to get outside of our swim lane and chase low margin volume work, because we don't think that's a winning strategy. Second, PPHC combines the profitability and retention of a trusted client-focused advisory with the growth market that we have.
One of the things we're going to talk about is the stickiness of our client relationships. Roel has some excellent slides that he's going to show you that talk about the fact that we have an absurd renewal rate with our clients and relationship matrix with them that lasts year after year through issue after issue, and they do not generally leave us. That creates a lot of inherent advantages when you're in a growth business. Finally, a couple of other points to emphasize. We have a total addressable market that we thought through a lot of research that Thomas put together over a period of time, that we think at least in public affairs lobbying/the communications data assets that support our core work that we started in, which was government relations.
We think that addressable market worldwide is at least $20 billion, is what corporates and nonprofits are spending on that right now. We think that moving to strategic communications with exciting acquisition of TrailRunner that was announced Monday, which is a pure play strategic communications litigation support, crisis communications, and financial communications firm, moves us into a massive opportunity and additional market that we can now go and conquer in a comprehensive fashion. PPHC's model is a consolidation model, but again, you have to understand that we're not chasing low margin businesses, and we're working for complementary businesses to work together. Again, know that this is a holding company, but it is not a holding company in that true sense of the word. Public company model with a high degree of employee ownership. That's important. We'll talk a little bit about talent. In our business, talent faces clients.
Clients like the talent that interfaces with them. How do you keep your talent around, both from a skillset standpoint, an issue depth knowledge standpoint, and a client satisfaction standpoint? Employee ownership is critical. Being public is critical to us because of that employee ownership opportunity to bind people in the company in a different way rather than simply worrying about your salary and your bonus every year. Finally, the company is highly profitable, generates great cash flow, again, which Roel will talk to you about. We have an interim goal, a medium-term goal to reach $500 million of revenue in the coming years through a combination of organic and, again, complementary acquisitive growth. Just quickly, just to emphasize a couple of those points. Again, complementary portfolio. You will not see a lot of duplication in terms of capabilities or geography in our portfolio of companies.
They have an incentive and an ability to work together that's different than, again, a lot of holding company models. We're headquartered in Washington, D.C. We're now throughout the globe. We, I think, have achieved almost near no sunset on our sales after Monday. We're headquartered in Washington, which was our original center of gravity, now we operate all the way from Northern California to Shanghai. We are truly building a global network to address the challenges that our clients face. We service around 1,200 clients today. When TrailRunner is officially in the group, that's probably go over 1,300. If you look at the quality of the labels, again, which we'll show you and who those clients are, you'll see that these are major corporate players, again, major trade associations, industry associations, and again, leading nonprofits in the world that are easily recognizable.
We have about 400 specialists today, people that range the gamut from certain areas of policy expertise to certain communication skill sets that support our work for our clients. We have 85 employee owners today. Again, in April, that will change. We have 85 recognized assets out of that 400 that are actually tradable market assets, securities. We have another roughly almost 100 more or 80+ more within the company employee base now of around 400 that has actual various forms of equity incentives. Again, you can see how deep and how important that is for us. Just again, just to get back to that point. Who are we? The intersection is PPHC. We are the hub, so to speak, although that's a shopworn term. When you look at all of the capabilities you'll see here, none of them are really the same.
You could probably say CRS and Alpine here look a lot alike as federal lobbying firms. There's a lot of headroom in that space. There's 2,200 registered lobbying firms in Washington, D.C. Having three of the top 20 is not a problem for us. When you get beyond that, you begin to see our strategic and corporate communications affairs, corporate affairs communications. We've got Seven Letter, LPA, Concordant, TrailRunner, et cetera. They're all comms assets that will play varying roles in support of, again, what we call person to policymaker decision-making. I think the right-hand side is extremely interesting in the context of the United States and our constitutional makeup and the way policy is made. Getting into the states was very critical to us. There's been a trend.
Thomas has a very illustrious chart that began probably about a little over a decade ago, where issues began leaving the so-called Beltway, and they became much more active on states. Being able to reach in all 50 U.S. state jurisdictions, especially places like California, which is as active as any country in the world would be, and knowing also now that we need to have global reach because the issues, as we always say in Sacramento, seem to pop up in Brussels and London sometimes and fly right over Washington. Again, there you go. There's the standard dots on the map that you can see, again, from our humble beginnings in Washington, that we've obviously come a long way. Just this chart, and I always love this one because I think, again, it illustrates the stickiness of our client relationships and high renewal rates.
The revenue build speaks for itself. The organic is in red and the acquisitive is in light blue. The interesting thing is a lot of times people have a really good growth year and organic growth year like we did in 2021. A couple of factors we'll talk about played into that. When you have a year like that, a lot of times, especially in PR and in communications on the commercial side, you have a big ramp up, all the projects go away the next year and you go back down. Because of the nature of our deep relationships with our clients, the retainer-based nature of those client relationships, when we take ground, we don't give it back. We'll start a year where a commercial PR firm/advertising firm will start a year with maybe 70% of their revenue unidentified.
When Roel Smits starts his budget process with his team, we have 80% of ours identified. Again, when you see this chart, if we ever go backwards from one of these bars, I would be extremely surprised, and you should be too, and you should be asking questions because it just typically does not work the way in the high-end advisory space we work in. Take territory, keep territory. Quickly, why are we listed? There's a lot of reasons we thought would provide us more flexibility to get growth capital and not have the yoke of a private equity fund around our neck with a very short-term thinking horizon. It allows us to think more long-term. Again, it's been very useful for us, again, in terms of driving employee ownership, which drives retention and recruitment. That is why we are public.
Quickly, again, we started from what we knew. Where were we then? We started with lobbying, D.C.-based assets that were federally focused on federal policy influence. As we move post-IPO today, what have we done? We've expanded into the states in a significant way. We have increased our communications offerings that support the old traditional person to policymaker direct advocacy, or commonly called lobbying in the United States activities. We've also added a number of research assets and data. Your communications are only as good as your ability to know what people are thinking, know what groups are thinking what, and then figuring out how to reach them. Again, as we move forward into the future, we're going to deepen our research capabilities even beyond where we are now.
With the advances in data, obviously AI and other instruments, we certainly know that our ability to get cheaper and better data sets to service our clients, provides a great opportunity, and we want to maintain the quality of our work in that space. We look, again, geographies. Finally, obviously, I just mentioned the ambition that we would love to get to $500 million, and we think we've got a pathway to do it. With that, I'll hand it over to Thomas, and you won't hear from me again until the end unless you have a question. Thank you.
You will hear from him again, and you will have questions. What do we do? I'm going to address the elephant in the room.
When we started softening the market here, so to speak, and getting people lined up for our IPO, I remember a call with a journalist, and she said, I'll leave her nameless, but she said 5 minutes into the conversation, she had to ask Stewart Hall about, oh, you actually call yourselves lobbyists. Back up to deal with the nomenclature involved in the business. In D.C. and across 34 of the 50 states, lobbying is a very carefully defined and highly regulated industry. Every quarter, every dollar, every name is reported to the federal government or the state governments, in Cassandra's case. That means that people know very clearly client exposure, lobbyist exposure online on a quarterly basis. You can remember about 15 years ago, an organization called Politico started.
Now every day at about 5:30, we get the influence newsletter, which shows which lobbyist was hired, which firm was hired, which case. I mean, it is a very active media market that looks at this work. Therefore, as you get from lobbying into public affairs, which you all call the lobbying, or I'm a lobbyist. I'm not a lobbyist. Public affairs in the United States and across the state markets is that which is not across the line of direct access, direct contact with legislative authorities, elected officials, staffs, et cetera. It is this communication surround sound. It is the targeted media. It is the grassroots campaign that, yes, is in companion with that lobbyist, that direct access.
As he mentioned, the sort of digital disruption that has happened in the space is such that you can't shake a hand with a senator and get what you need until you convince that senator that her or his constituency is aligned, understands the consequences of the legislation, understands the prioritization. That's been a 20-year evolution, both by media and an ever sort of politically charged environment. As we speak of, we're not afraid of the term lobbyist. It is Stewart's, dare I say, dream job, or at least dream assignment, to come over here and work with your government and build a proper disclosure regime. We also see that as a very big tailwind for us as more and more geographies, Germany, France, the EU has gone through three rounds, are tightening this definition and expecting more transparency out of this ecosystem.
We've added, since you would've seen this perhaps at our IPO, of course, based on both our organic growth and our recent acquisition, the broader strategic comms world, I would argue is more of a private equity driven title, right? It's not PR, it's not whatever, it's strategic comms. That said, this red thread that really goes through the top issues, concerns, crises of a corporate is affecting all of these boxes, constituencies across the top. Yes, if you speak to politicians, their staff, or regulators, of which there are thousands and thousands in Washington, D.C. and state capitals, that's disclosed. You know who you spoke to and on what issue. As you move down the sort of ecosystem of audiences all the way to sort of elite and investor audiences, you see how this sort of bifurcation of our portfolio works.
Again, it's things like interface, direct access, agenda setting, new market entry growth, issues management crisis, and of course, the thought leadership reputation building. You can imagine now, and I'll address another elephant in the room, a lot of this is happening in Washington right now because something just happened in November that has us all wondering what comes next. Who do we do it for? Nearly 1,300 clients. This is but a subset. That said, against the sort of different types of work that we do, the middle being more of the integrated solutions, which we're gearing all of our clients towards. These are names you know, some you love, you all respect. These are big major players. Half of the Fortune 100 are in the portfolio, trade associations, major nonprofits.
This is an active work that everyone does, respecting their interface with both federal, state, and increasingly international governments. Market sizing. I will say this was a very onerous task, especially when it needed to be verified for our IPO, because these transparency registrars, the definitions all vary. You can say PR globally is about a $32 billion market cap, right? There's different things. As we look at it across the segments that I've just described, this is well over a $20 billion TAM. That said, you need to sort of look at the subsets of it. Stewart mentioned this piece particularly. This has been a dramatic change. States are growing now faster than the federal lobbying. That is just given the political ecosystem that Stewart just mentioned. This is our bread and butter.
Stewart started the business after our shared WPP experiences of saying, how do we look at this incredibly sticky, very profitable client need and begin to build the services that support that advocacy across the portfolio? Here we are 10 years later. We still remain t he biggest player in town from this lobbying anchor. In town, I mean Washington, D.C., the U.S. federal government.
You'll see three of our shops, as he mentioned, are in the top 20 of more than 2,500 registered firms, not just individuals, but firms in Washington. This is a pretty, dare I say, static list, right? You see lots and lots of others that will come with a new administration or a new sort of partisan flavor. Ours are thoroughly bipartisan organizations, Republicans working beside Democrats, issue experts beside policy experts. As we move into this growth strategy, this is the area heavy in private equity, as you all know. Some are legacy brands. You look at an Edelman, a Brunswick, et cetera.
They've gone through capital raises. They have moved, they're aiming to move more into our space, not just in lobbying per se, but more in this sort of strat comms, high issue management, policy expertise. We have started at this incredibly rich base foundation and grown the other way. We have obviously the different model versus the only one public here is FTI. The others have all basically taken the private equity in different forms. Our employees, we are only as good as the people that walk through the doors every day or show up on the Zoom conference calls now that we're in the modern era. As we get through this is the biggest one. This is the differentiator.
We are both an employee-owned organization, largely 75% in the hands, and therefore the collaboration that people in our rival platforms would like to see across their groups. Well, what's in it for me, right? In this case, you have a shared vernacular, a shared currency, and quite frankly, a very close family of people that understand what we're doing and how it's different from either where they worked before or what they see in the market. 165 folks, we'll add more to it when they formally come on board on April 1st. That half of the employee population, I'll stack those numbers against others from a differentiated employee proposition any day. First time, debut here in London and around the world.
I'm going to invite three of my beloved colleagues, representing ends of the 10-year trajectory that we've been at this, to come up and join me for a bit of a panel discussion. Can I have Mat, Cassandra, and Ollie Foster please join me on stage?
This is the first time we've availed your beautiful faces to our investors because we like to keep you busily serving and pleasing our clients. I'm happy to have you here sharing the stage with us. I just want to get a quick couple of minutes from each of you on your personal backgrounds and then by extension, the firms that you all respectively lead. If I could start with my friend Cassandra, please.
I was going to say good morning because I think it is 7:00 A.M. in Sacramento.
In Sacramento.
I'm from California. I am in Sacramento. Good afternoon. It's nice to be here. I'm that nervous, but this is a first for me. I've always worked for privately held companies, so this is kind of fun. Am I up there?
You are up there.
There we go. Okay. My background really quickly is pretty simple. I spent about 10 years as a lobbyist for the supermarket industry, both in D.C. and in Sacramento. Moved on to do political work. I ran all the political programs for the largest business association in the state of California, the California Chamber of Commerce. Then a quirky little thing called a recall happened, where our governor was recalled, and Arnold Schwarzenegger, a name that you might know, was elected governor. I worked on the transition team and then the transition staff, and then actually went inside and served as Deputy Chief of Staff to the governor for about two years, the longest two years of my life.
Had an opportunity to work for a global consultancy and wound up in a partnership with a wonderful woman and colleague who actually worked with me and served with me in the governor's office, Donna Lucas, who is founder of LPA. Donna and I like to say these things about LPA, that we sort of operate at that nexus between politics, policy, and communications. We work on all the issues of the day that are important to California, from energy, renewable and traditional, to higher ed, and even K through 12, infrastructure to insurance, which is now obviously very important. We've got a great team of practitioners that literally runs just about every generation. We've got a couple of 60-somethings, 50-somethings to 20-somethings. That part's very exciting to us.
We also both like to say that our day is typically a lot like days in the governor's office where you don't know what problem you're going to have to solve, but you've got to draw on resources from a variety of places to resolve them, and that's why I think I enjoy the work so much, and I'm so excited about this opportunity because it gives us a chance to draw on resources from a lot of places. Excited to be here and looking forward to your questions.
Thank you so much. Mathew?
Good afternoon, everyone. My name's Mat Lapins ki. I've been a lobbyist my entire adult life, quite literally. I've completely misspent youth. I found an internship at a lobbying firm when I was 19 years old as a sophomore at Georgetown University, and never looked back. I worked for a financial services trade association for about four years. I spent nine years in the D.C. government affairs office of a law firm that's now known as Dentons. It was called Sullivan & Cromwell when I joined, but over the course of a decade, became Dentons. I helped run their multi-practice group response to the financial crisis in 2008. I helped respond to the passage of the Affordable Care Act there. After I grew a little too big for a law firm, I decided to hook back up with Stewart who I actually had met when I was 19.
I think he realized who I was when I was 35. Yeah. I came up with Crossroads in 2013, and I'm really proud of what we've been able to build since then. When I joined the firm, we had about six practitioners and did about $4 million a year in revenue. If you look at what we're doing now, we're a 30-person firm that's basically split down the middle between Republicans and Democrats, doing about $25 million in revenue. We've done that in two ways. One, we've recruited really good people from the public sector, taking people from the federal government, be it Congress, be it the administration, finding lateral recruits into the firm, either from other firms or from corporate offices or trade association offices where we felt they would complement our approach.
The third thing is just doing some strategic M&A, finding one and two-person groups or smaller lobbying firms and bringing them under the Crossroads umbrella. When I think about Crossroads and when our clients think about Crossroads, I think there are three things that really stand out. One, it's the totality of the approach that we take. When you hire the firm, you get all of our practitioners. A lot of us work for law firms. They can silo people into very small teams, and how they compensate their people is really terrible. It doesn't encourage collaboration. It doesn't encourage shared teamwork. We blew that model up, and when you hire the firm, you get everybody. Two, responsiveness. We know we're in a very competitive market, and people have a lot of choices. Stewart referenced 2,200 registered lobbying firms in D.C.
They're trying to get all of our clients all the time, and we're trying to get all of theirs all the time. We know that if we're not responding to our clients, they're going to look elsewhere. Three is proactivity. Strategic thinking and proactivity. There are two pieces there. Gone are the days when you can pick up the phone and call a friend, and they'll do you a favor, and that will get the result that you need from government. Transparency has made that impossible. The velocity of change of public opinion has made that impossible. Coming up in consultation with our clients, with strategic plans to deal with a diverse and often changing set of audiences, and developing the correct messengers to deliver those messages are really key and just as important as the relationships that we have with policymakers.
It's a really great and exciting firm. We've been a great firm for the last 15 years. I feel like we've got a team in place now that has us positioned to continue to be great for another 15 years.
Awesome. Thank you. After we go through here, if there are questions, particularly from my colleagues before we get into sort of macro questions at the end, wave your hand. I want to take advantage of their time, and answer all the sort of nitty-gritty questions you have. Over to you, Mr. Foster.
Yeah. Well, I'm not supposed to be here really. I started my career training to be a barrister. I quit halfway through and realized law wasn't for me, but I was quite interested in politics. I rejected an offer to work at Buckingham Palace for the late Queen, and fell into this industry. I started working for various trade associations, the ITS and SMMT, some of which you'll be familiar with, the car industry and property industry, and then for various PLCs like ITV. That's where I met Mark Gallagher, who was my boss at ITV in 2006, 2007. We hit it off. In fact, we kind of bonded over his portrait of Margaret Thatcher on his desk, which was fine. We were interested in political discussion at that point, even though we were sort of different ends of the political spectrum.
We hired lots of agencies, as you'd expect in companies and organizations like that. We never felt we had an agency on our side who truly understood what it was like to be the client. They were very good, very polished, very impressive individuals, very educated, and the work was good. They were never fired, but we never felt they truly understood what it was like to have the pressure in-house, the client does. We were determined to set something up that was different to that back in 2010, and wanted to populate the agency, not just with slick suited and booted lobbyists, a word that I am very proud to use, and I'm on a single-man mission to make it an attractive word here in the U.K. We'll come back to that later in the discussion.
To have a blend of people, different experiences, different walks of life, diversity of thought, as well as other types of diversity. That was back in 2010, and we've built the firm over the last 15 years, into one that is truly cross-party, bipartisan, which is the term that I've learned to use with my American brothers and sisters. That has set us up brilliantly, obviously, for the change in government that has come in the last year in the U.K. What I'd say in addition to what's on the slide here about Pagefield, I like to think of what we do now, particularly since the acquisition last year, as a beautiful bespoke dining table with four legs. Those legs are our core pillars of what we do, corporate reputation, policy and public affairs, lobbying, digital marketing, and campaigning.
Those outcome-oriented campaigns, for example, I think it's on the screen. We're currently working for the campaign for repatriation of the Elgin Marbles. That takes in all of those four pillars, because we won't be successful without operating for our clients with knowledge of corporate reputation, knowledge of digital and social media, and knowledge of policy and public affairs.
Thank you all, and timing right on. I'm going to back your pretty pictures. I mentioned the elephant in the room. Mat, what's going on in Washington these days? I mean, let's address also there was a tragic plane crash in Washington last night, I don't want to be too flip geographically, apologies for that. The Trump phenomenon, and where you see the noise of 300 executive actions and Senate hearings and such, just give us a read from your expertise on where the prioritization will shake out, particularly on the legislative side. Will there be breaks? Will there be accelerants? We're in uncharted territory from my perspective.
We're in uncharted territory, but it rhymes with previous history because President Trump this time around is basically behaving the same way President Trump behaved last time around. I think having watched four years of the Trump administration and now having watched four years of Trump not in the White House and now seeing where he is and how he's acting again, I think there's a few things that are common threads that run through everything. President Trump likes to go into any negotiation he has, and he views everything as a negotiation, with the maximum possible leverage. That's what we're seeing right now. I think where it's played out most clearly to me thus far is tariffs.
The Monday before American Thanksgiving, which was last Thursday, November, late at night he tweeted that he was going to impose across the board 25% tariffs on Mexico and Canada. This came out of the blue from nowhere. Since then, we have seen Canadians and Mexicans do what they can to get back into President Trump's good graces. I think what we saw this past weekend in Colombia is another example of it, I think we're going to continue to see it. Even the last sort of 36 hours of sort of activity around this federal government funding freeze is really designed to set the President up in a position where he can have conversations around federal government spending, the nature of the federal workforce, the nature of the civil service in a way that gives him the most possible leverage to act the way he wants.
I'd also say President Trump and the people around him know what they're doing this time around as opposed to the last time, and I think they're trying to make meaningful, long-lasting change to how the federal government interacts with business in the United States, how the United States interacts with foreign partners, how the American people view the federal government in a way that's going to last beyond this presidency. I think the challenges are twofold. One, the system can only take so much input, and he's trying to overload the system now. We'll see how successful he is in the long run in his ability to continue to do that. Two is that there are still three coequal branches of governing Washington. You've got the judiciary, the legislature, and the executive.
The President is going to be dependent on Congress to do a lot this year and to get a lot of his agenda enacted. He's going to have to work with Capitol Hill. Republicans swept control of both the U.S. House and the U.S. Senate in November, but by really tiny margins. If any of you have watched sort of American government over the last two years, the Republican, quote-unquote, majority in the House has been a very dysfunctional majority. It's actually shrunk from where it was two years ago. His ability to enact any major legislation is going to be a challenge. I think where the rubber's really going to hit the road is the big ticket item that Congress has to do in 2025 is pass a tax bill.
At the end of this year, if Congress chooses not to act or doesn't act, American businesses and individuals will see $5 trillion in tax increases. I guarantee President Trump's legacy is not going to be increasing taxes on the American people by $5 trillion. We're going to have some very ugly sausage-making over the next nine months to get an outcome in and around tax policy while we have this swirl of tariffs and immigration and border security and government spending, et cetera. It is going to be a lot. We're going to have to stay tuned whatever his whims are on any given day because that's what's going to drive the policy conversation.
Thank you for that. I don't know that I'm relieved by that through line, but I'll leave it at that for now. I mentioned our origin of the Acela Corridor, as we call it, the sort of D.C. trio of businesses, very D.C. centric in the early days. We knew post-IPO, we, PPHC, knew that California needed to be our first move. That is very much a play on not only is California the 6th, sometimes the 5th largest economy in the world, but it is the potential backstop here. It is leading edge by way of progressive policies. You sell cars in the United States, you sell 1 out of 4 of them in California or New York, you're going to deal with limits on emissions and such. It's just that kind of scale of some of the more progressive sides.
I say that also now we have two. We are in our minds, and I think we're the largest player in California now, given that we have KP Public Affairs that came in immediately after IPO or pretty much thereafter, and then adding Cassandra and Donna's operation as well. Cassandra, I say that all in getting to you. There was a lot of talk of California as the opposition. There is a lot of talk of California opposition. That is still the play. We have a dramatic tragedy in Los Angeles, which changes the calculus a little bit vis-à-vis everything from insurance needs to federal reconstruction. Give us the read on how the opposition is doing and your read on both what Mat says on Washington and then how it plays out with Gavin Newsom and the quite progressive legislature of California.
Well, I'm a Star Wars fan. Welcome to the land of the resistance is what I like to say. Shortly after the tweet on Thanksgiving, our governor, Gavin Newsom, made it clear that he was going to call a special session of the legislature to allocate about $25 million to spend on lawsuits and other things to fight all things Trump, be it around immigration, regulation, spending, a little bit of everything. Things were marching along, if you will, to stick with the Star Wars theme. Things were marching along, quite frankly, until I'd say two or three things. One, the reality of the election set in, because as blue as California is, and it is deeply blue, there are shades of blue in that Democratic caucus.
I'd say some Democrats walked away from that election understanding that it was a little bit about the land of opportunity and all the wonderful things that California has to offer, but a lot about how expensive it is. Everything from gas to utilities, just housing, just living in California is very expensive. That bore itself out in exit polls and obviously in a lot of what we saw in terms of results in the national election. Resistance, yes, but tempered by at least some of us understanding that we've got to deal with some of the policy challenges that have led to the state being so expensive. That's a piece of it. Unfortunately, along came the fires. I don't know how many people travel to L.A. or know L.A. very well.
We're talking scads of properties and not just the Palisades where lots of well-known Hollywood types live, but entire communities have lost first and second and third-generation wealth. It's not just tragic, but it's going to have long-term impacts. Resistance, yes, but we've got some big things, big-ticket things, big important things that we're going to have to deal with over the coming months. I think some of that's going to overshadow the resistance. I don't know if you caught it, but I was also mildly impressed, I'll say, with the way the governor engaged the president when he visited the Southern California region right after the fires. Both of them talked about the fact that they were going to work together to try to resolve what is going to be a pretty long.
Let's talk about the showmanship there a bit, just because all things come to style. The media sets the equation. If I recall, the White House didn't even coordinate with the governor's office on arrival. Regardless of partisanship, it is if Air Force One is flying into your state, your governor is there to greet. That was not the case, right?
He was not invited or informed. What the Governor did, and again, I give him a little credit for the showmanship, was show up, and he was on the tarmac, and he greeted the plane, and down came the President and the First Lady. Not only did the Governor greet the President, but he held his hand for a very long time.
Wearing very rugged jeans, I might add.
Wouldn't let it go, and gave him a bro pat, and it was just such theater, which I enjoyed. I think the press gaggle afterwards, for me, said a lot in that they both said, in spite of all the things they said about each other on Twitter, they both said in front of the press what people who were hurting in that community needed to hear.
Yeah.
I think some of this is theater. A lot of this is going to still take place behind the scenes and get things done, because L.A. is a huge part of the California economy.
Yeah. I want to get to Ollie. Sorry, Mat. I'm going to just, because we are in another country, if Donald Trump is calling Canada the 51st state, Greenland the 52nd, at least culturally, we can assume his love of the U.K. means that you are all definitely invited. You just had a really interesting election cycle here. You have a, well, I'll let you editorialize what the state of the current government is. Not only what the impact on a Trump election is vis-à-vis populism and everything else, but what does that election that happened back home for us mean for your politics and certainly Keir Starmer's sort of future vis-à-vis his government?
Yeah, I'll come to that. I would just say up front that A-level students of politics in two years will be studying the last six to nine months of what this Labour government here has done and how to squander the most huge majority that they have secured. Despite the popular vote not giving them such a mandate, they had the opportunity to unite through the policies, and they have squandered that, and they have got such record low ratings of a government six to nine months into power. We may come back to that.
That does link to the question about Trump, because you find yourself, we find ourselves in the U.K. with a government that doesn't quite know which direction is east ahead, trying to spend the last week convincing us that it has a plan for growth and that expanding airports in the next 30 years is going to deliver that growth, even though most of us know that Heathrow will never get built because it's been tried for 50 years. Alongside that, you've got them having issued a budget in October last year, a week or two after which I think the tweet was sent by Trump.
They realized, we didn't quite factor that into our spending and taxation plans. There are a lot of headless chickens running around the U.K. government right now at all levels desperately trying to find solutions, which is an opportunity.
Yeah.
Now more than ever before, as lots of people in this audience I'm sure will appreciate, we are living in the U.K. in a multi-party state, and we have been used to it going between the two major parties in terms of the power. We had a period of coalition, which was broadly a happy coalition, and did deliver more than anyone expected. We now have Reform that are, in opinion polls at least, beating the two major parties. The Conservative Party, uncharted territory with a leader and a very low number of MPs with some local elections coming up. The reason I say that is because we in the U.K., even though it is slightly different from the presidential system, we are now experiencing extremes of politics.
Whilst we may have a Labour government in play here at the moment, still a very centrist or center-left agenda, the extremes of the left and the extremes of the right in Reform are rearming and ready to take on the Tories and Labour at the locals and at the next general election. Where that's relevant to us is from the point I wanted to make upfront in my introduction, is that we have always wanted to be that cross-party agency. We are at the moment, even though some clients may raise an eyebrow wanting in our discussions with them to raise the fact that they shouldn't be forgetting about Reform. If there are areas we need to discuss with government, there are policy agendas they have.
We have one or two members of our team who a few years ago were not particularly popular members of the team, but now are quite popular members of the team because they know how Reform works. They are mates with Nigel Farage. They are mates with the people around the Reform leadership. Personally, I hope that Reform don't have the resurgence that everyone's predicting, but we have to work on the basis that the current forecast of the opinion polls are going to have a serious impact on the political makeup of the government of the future.
Thank you for that. I want to give you a bit of the soapbox that I promised you because, as I acknowledged early on, we're not shy of the term lobbying. I was very curious once we actually found our match here or our first firm to join the family. You sold to a U.S. lobbyist group. I believe the FT headline was Pagefield Sells to American Lobbyist Giants. Any other time you see the term lobbyist in the FT, it's a slander. It framed with a very happy sort of turn of phrase. What market reaction to that from a very competitive London PR town, and then by extension, sort of what is happening here by way of transparency or lack of transparency and this sort of word soup of what we all do because you're afraid of the term lobbying.
I just want to give a sense from a trade perspective how that works competitively.
Yeah, this really bugs me because the term lobbying, lobby, lobbyist, there's debate about exactly where it came from. I'm pretty confident that the mother of Parliament is here in London, and the central lobby is where that term came from. There are still lobby journalists, and central lobby is still the place that people go to lobby their MP, and it's the central point between the House of Commons and House of Lords. It has historical recognition, yet we in our industry, apart from me and a few others, are reluctant to use the term because in recent years, there have been lobbying scandals. If you look at where those lobbying scandals originated, it's not through firms like ours or indeed our competitors. It is the politicians themselves.
Thomas and I spoke to the entrance, Stewart as well, and as we were dating as part of this process last year, and I started to understand more from Mat and his colleagues and others quite how regulated the U.S. system was, despite the appearance over here that actually all it matters in the U.S. if you've got money, you can buy influence. No sense of in the media representation here that it's heavily regulated. A sense over here, a classic sort of British approach that we know best and therefore we're fine. It is a Wild West, and there is no level playing field in the lobbying system here in the U.K. There is a official government register, but you only have to register on that if you have been in direct contact with a permanent secretary or a government minister.
Well, I'm sure all of you know, even though you may not be expert in lobbying, that lobbying is more than that, and public affairs is much more than that. The official register doesn't work. A David Cameron compromise with the Dems. The industry self-regulation doesn't work because lots of our competitors don't sign up to it. They continue to employ MPs and/or peers on their books, and we are there, the good guys, and not able to do that. I would fully support the idea of Stewart coming over here on a one-man mission, make it a two-man mission, to bring some sort of order to the regulation of our industry to make sure that it's a fair and-
Can we ask a question?
Yeah, please.
Oliver, we're going to hit your mic because we're on video. I want to make sure.
That we start again or?
Wait. You're not going to hear it here. You're just going to hear it on tape. Go.
Okay. The serious question for PPHC, I think, is, will the U.K. and the EU, and the EU, obviously, is a giant economy. What proportion of PPHC's revenues could that be on a kind of 10-year view? I think, Oliver, in the U.K., obviously, you guys will be shocked. We have extraordinarily conflicted politicians who there's no standards compared to, say, in the financial services industry. We saw a minister recently had to resign because of extraordinary political connection, which we would have to declare, say, in our industry, and you would have to declare in the U.S., but doesn't have to be declared here. Is there any sort of momentum? Parliament doesn't even have an HR. Is there any kind of momentum actually to regulate or formalize the lobbying industry?
If there was, you guys could, as part of the bigger group, could be at the forefront of that. Is the U.K. and the EU a kind of nice-to-have, or do you actually believe that the lobbying industry will become more regulated, more formalized, and therefore something that we could project significant revenues from in the context of the group?
I'll start, and then I'll go to the other end to get a more local perspective. When we do the market sizing, yes, the U.S. bar on that chart is significantly larger. If you look at a proxy, I mentioned Politico earlier. The Politico business across Europe is about a third of the size of the D.C. business, and it's a 10-year business versus a 15, 20-year business. That proportion feels about right when you look across member countries as proportion of the corporate spend. We have a chart later that might be in the appendix now, to be honest, that is what is disclosable on either Brussels equivalent register or, as I've mentioned, France, Germany, other member countries have sort of stepped up the expectations.
Germany's done three rounds at all levels of government, and their lobbying register has gone from 2,000 individuals to 12,000 in the course of two years. There is a tightening. That's a media scrutiny reality, if you need to tighten, and the fact that these corporates are more and more spending against global policy issues. One team, whether it be a U.S.-domiciled business or an Italian-domiciled business, there is a sort of a link that's going on that you need to have a safe pair of hands and be covering the map at the same time. The patchwork of solution isn't working in the interconnected world we live in, and the media scrutiny of it is newfound. I'll go to you for a view on Europe as you see it.
Yeah. It reminds me of 20 odd years ago now when I worked in Brussels, I was paid in brown envelopes because that was symptomatic of the system. I don't know if it's changed. That was because MEPs were able to get away with pocketing a full amount of stipend and passing some cash to stagiaires like me to keep me sweet. That is a very crude example of where I think the EU has got a lot of time to catch up on the levels of regulation in the U.S., where it's clear that you are streets ahead of how lobbying generally is regulated here. I don't know specific individual EU countries, what they're up to. I can only speak to the U.K.
To your original question, I think if the government hadn't started so badly, they genuinely might have looked at this, but it's not going to be a priority, I can't imagine, for them. Don't forget that they are in the pocket of the trade unions, and the trade unions are quite happy with the status quo because the trade unions manage to circumvent the way that lobbying is currently registered. I think there is a role for the industry to play. The PRCA, which is the self-regulatory body of the industry here, has announced a review of its own code, something that we welcome. It requires our competitors to sign up to it. Fine for PRCA to update its code and make it more fit for purpose.
If half of our competitors don't sign up, we're kind of still in the same position until government actually regulates from a legislative point of view. Yeah.
I'm mindful of our time. I'm going to take your question. I'm going to do one closer, then this is like the dot, dot, an ellipsis. All these folks will be having cocktails with you later on. We'll be teed up lots of conversation.
Thank you. My name is Dan Ekstein. I work at GreenLane Investment Management. I'm interested in the perspectives of Mat, Cassandra, and Oliver on life outside the PPHC Group and prior to acquisition and life within it. I'm sure you're also fantastic. I'll ask you to focus on two specifics. One is, does it enable you to operate at lower cost or with a greater degree of efficiency? Secondly, does it enable you to grow faster? Thanks.
I'm going to add one to this, which was my final question, do the sort of why PPHC? It's a slightly modified version from Mat because he came in, as he mentioned, he's been a careerist with us, so it wasn't an acquisition in as much as, but certainly on his bookends, recent acquisitions that were crowded processes, right? They had lots of bidders in a very hot market right now. Starting with Cassandra responding to his question, but adding that layer of us versus, say, other suitors that you could be sitting here with today.
Happy to answer that question. I'd say yes and yes. Yes, more efficient. Yes, really pleased with outcome so far on a couple of fronts. We said this more than once to each other. It did really feel last year like we were the prettiest girls at the dance because we heard from a little bit of everybody, including the PPHC Group. Seriously, I would say a few things for us. One, efficiencies, but also opportunity to really leverage talent, contacts, intel, resources, particularly with respect to the polling and the research, almost immediately. Two very specific examples from this week. Mat talked about the emergency around federal funding. I had three clients call and say, what gives?
What can you tell us? We were able to literally get on the line with and then get scheduled for conversations with a couple of folks in the network who would know, or at least know more than we knew. Instantly, we were able to not just do that, but talk about that value with clients.
I also referenced the fact that we're going to take a look at messaging and how we influence that Democratic caucus in California around this issue of affordability, which we think still is important and certainly going to be more important after the fires. We are collectively with some of our colleagues in the network, also with a handful of clients going to field a poll using our Seven Letter partners probably less expensively than if we'd chosen partners in California. To immediately leverage information that will be proprietary to us that we can share with clients, and it's going to help us both with messaging, also help individual clients with some of the data points they need to do their work. Those are two resources that we can use probably less expensively, quite frankly, than if we did so in market.
Then we've got access to really, really smart people in D.C., and now thankfully in other capitals to share intel, and which for us is premium. There is a value to that. Short answer is thrilled, and they also happen to be really nice people, which is important to Californians. Mat?
The efficiency is incredible just in terms of the amount of time I don't have to spend, and senior members of our team don't have to spend dealing with HR and billing and legal. The fact that there's somewhere that we can spend time either going out and chasing clients, getting client work, or recruiting new people into the firm rather than dealing with administrative tasks is incredibly helpful to me. On growth, I think from two perspectives, growth is really good. One, our ability to co-market other branded companies within PPHC services along with ours is great. It's a differentiator in terms of how we're able to pitch clients and offer services that they can't get if you go to another firm that looks like ours. I think most importantly to me is how we can recruit talent.
The fact that we can pay people in a way that other lobbying firms can't pay people in terms of cash and equity both incentivizes people to come into the firm and actually holds the team together over the long run. I think if you look at a lot of the deals that have happened over the last 20 years in D.C., they're either PE deals or a bigger public affairs firm buys someone. If you're in the deal, you get some cash up front, you have benchmarks you have to hit over a period of time, you get a completion payment, then you're done. There's nothing to either incentivize people who join a firm to work really hard because they're not going to get paid out on that deal, and there's nothing to keep that talent together once the final completion payment is over.
By equitizing larger and larger parts of our workforce and our professionals over a rolling period of time, we're going to be able to keep teams together over a longer period of time. At the end of the day, we're human capital businesses. If we're able to hold our human capital together, we're going to keep clients longer and get more.
Before going to Ollie, who will close, I will say that when I reconnected with Stewart five or six years ago, we had both sold businesses into WPP and were on the cap table founders. Kids' college education is just fine. The reality was that we shared despite being in the comm, I was a comms digital. He was always a lobbyist. We said, gosh, it's a shame we did not retain any of the employees that were sort of under us. There was no way of keeping the firms whole. It was aggregate revenue. The second was that there was no other than at the time making Martin Sorrell happy, which was important. There was no real reason to do work with your partner agencies because there was no incentive program in place.
To Stewart's great credit before my time, 10% of a referred contract that goes from Cassandra to Mat, vice versa, goes to the referrer for the life of the contract. That's not project fee, that's the life of the contract because these retainers renew at 80%-90%. Why should she not, in the case of a referral, be continued to be thanked for that? That money goes right to her bottom line and to her bonus pool. Not only have we built the vernacular of understanding what everyone does and put dots on the map that makes it really important for the client to punch above the weight. Over to you, though, because you're the first international outpost. We've added some more with TrailRunner, but Pagefield is a U.K. brand, and so the challenge and opportunity of that as you see it so far.
Yeah. I don't know how often in rooms like this you hear people like me talk about the importance of culture and emotional intelligence, but that was really important to us when we were selling last year. When I met these guys, it was clear they had it in droves. It's not just important for me and my team to know that we were getting into bed with people who passed the long train journey test, but that our clients would like them and that our clients would see us in them.
To flip, to pivot to the questions that were asked, the attractiveness of this group was the culture, was the emotional intelligence, but more importantly, or as importantly, was the fact that it is a house of brands, which I think Jim Wilkinson said yesterday when I first met him. There's no plan to homogenize. Increasingly our clients here in the U.K. I hear from my new brothers and sisters across the pond that clients want to know they've got the experts on the ground. They don't want the spotty teenager who is in a sub-office of one of the big global companies. They want an expert firm. Doesn't matter how big or small they are, they want the people that they meet in the pitch to deliver on the work. That's the promise that we've always had.
It is clear it is a promise that the PPHC companies who I met through the process also have. On efficiencies, we are obviously only six months in, but we can already see exactly the same points that Mat and Cassandra have been talking about. On growth, the 10% referral arrangement was a big selling point and very unique to PPHC, and it incentivizes quite different behaviors within our team, and I am sure within your teams. There is none of this, that happens a lot in the WPPs of this world. There is open arms, very open arms, and already Mat and I are talking one of our clients in the defense sector, a very exciting British company that is going places, and we are actually on the cusp of a really big contract for CRS that, as Thomas said, is through the lifetime of that agreement.
It is win-win from the perspective of the question you asked.
I've both really enjoyed having the three of you here in London. I hope it was enjoyable to put a little color context to what we, Stewart, Roel, and I have been talking about for a couple of years. I appreciate the journey and the time. Thank you so much.
All right. After all these communication experts, it's my role now as the CFO to really bring it down to a couple of numbers. Yeah. On Monday, we release actually the headline numbers of our 2024 performance, and I'm sure most of you have already studied that. I'm going to take you through that and add a little bit of color perhaps. This chart, you guys know, has been growing over the years, and indeed, we were very happy to add another growth bar to it for now it's another $150 million. Indeed, you know that the blue part that sits on top represents the growth that we accomplished by acquisitions, and the red is organic.
The blue part in 2024 was indeed due to us bringing in Lucas Public Affairs, Pagefield, and we also still had two months of MultiState revenue sitting in there because basically the way we organize our organic growth calculations is a company as of its 13th month in our group, it adds to organic growth. The first 12 months is acquired growth. You see we acquired $11 million of business in 2024. That means there's $4 million of organic growth sitting in there. That is, in any case, a bit better than in 2023, but still, it's a little bit below what we know we're capable of because if you look at the percentages at the top bar, you see that basically, we quite often have reached the double digits.
I want to really dig down a little bit into the organic growth of the past few years. Before I do so, I really want to first remind you of how our business breaks down by segments. You'll see that, of course, GR, that's lobbying, government relations, 69%. DS, that stands for diversified services, is 7%. DS came in actually when we acquired MultiState because as part of their portfolio, they're also offering compliance services. Really with all the regulations, our clients need to stay compliant, and we help them stay in compliance. It's the good old Levi strategy. They also have issue tracking. Because that didn't neatly fit into either lobbying or in public affairs communications, we created the diversified services segment. That's growing head over heels.
The good thing of lobbying efficacy and diversified services is both high retained business, it's very profitable, and it's really indeed a high retention rate. Public affairs and strategic communications, on the other hand, has huge growth potential. Okay, there's a little bit more volatility in there, and that has to do with the fact that there's project work sitting in there. We love it because it's really very often connected to the work that we're doing in lobbying and diversified services. That was a reminder. Let's go back to the revenues and the organic growth. On the left, you see the 2% and the 2.7% that I said I was going to dive into. You will immediately see here the reason why those numbers were a bit subdued. GR is no complaints about, 4% steady both years.
DS actually didn't even fit on the chart at 23%. You only see one year growth there, by the way, because indeed, as I said, they only came into our business in 2023. PA, that is where we saw negative growth. That down cycle really reflected both on project work, which was down, and also some contraction in retainers. Now, our analysis of why this is down. Actually, there's two reasons for that. I'm first going to show you how this looks by half year before you go into a lot of heart attack because, of course, this looks very scary. What's going to happen in the next year if this is the growth rate of PA?
Well, if you look at this by half year, you'll see actually that really what we've experienced is about a dip at the end of 2023 and the beginning of 2024.
Luckily in H2, we saw recovery to a level of 4%, which actually pleased us because it was still pre-elections. The main reason for the dip, as we've analyzed it in 2023 and early 2024, was in 2023, there were still very much concerns in the U.S. about the direction of the economy, plus there were clearly a lot of geopolitical issues around the world, the Gaza war, et cetera, and people uncertain about how this would spread across regions. We think that actually early 2024, some of these concerns tapered off about the economy and about geopolitical risks, but then that was replaced by the upcoming election. In communication land, elections mean a lot.
Actually, clients are not spending as much ahead of an election because, A, they first want to know the outcome of the election before they know what to communicate about, and B, the airwaves are very expensive because there's so much political messaging going on, which we're absolutely not involved in, but that it's too expensive to really communicate. Luckily, elections are now behind us. Everybody knows what agendas they need to drive. That's why in the lead up of that, we already saw public affairs pick up again in H2. We know that we're setting well for 2025, which I'm going to come back to. First, I want to give you a little bit of a further view of some metrics about our clients, which really underpin, I'd say, the solidity and quality of the underlying business. The first very simple chart.
Our number of clients has been growing organically as well as via acquisitions. When you have 1,226 clients, you can't handle them with just a few important client service people. These are lots of client service people working on these clients, and that's actually a good factor of stability for us as well. Clients don't hang on a few people. We have hundreds of farmers and hunters in our business. Now, another client fact is our client dependency. Luckily, that has been further declining to the point that we're really not dependent on single clients in terms of stability. That's actually, in a professional services company, quite rare. Even large companies like, the name has been mentioned, WPP, but you could also talk about Omnicom, Publicis, they often have a core of clients that represent at least 30% of their business.
We don't have that, we're feeling very good about that. Another fact, a KPI that we've been tracking all along, is actually the number of clients that spend more than $100,000 with us. Those are really our fuller clients. You see how that number has been gradually increasing to 503 right now. That's + 15%. Interestingly, those 503 clients, although that's really only 40% of our clients, they represent almost 83% of our revenues. They really represent the core of our collective member companies. Now, actually, somebody said to us just this week, like, hey, why are we still reporting clients over $100,000? Because really, that's not even that high a bar. I think as of March, when we're publishing our full numbers, then we will also talk about the number of clients over $250,000 or so.
I've already seen, of course, the data, the line is going up the same way, only a slightly lower number. Another client fact is categories and where our clients exist. You can see from this chart that we're really represented in all sectors. We're not particularly overweight in one sector or another. Really, I think if I look at this list, it pretty much represents the value of the economy in the U.S. and to a large extent also the U.K., with the largest ones obviously being in pharma, healthcare, finance, energy, and tech. There's a very nice cross-representation and as I said, we're not overweight in one or the other category. The final client fact that I wanted to bring back to you is our retention, client retention.
We've done this cohort analysis, a client cohort analysis, some of you might be familiar with this, you basically check when did the client enter the client roster, and then you track it along to see how that client develops year on year. This is everything together consolidated for PPHC. We have it, of course, for each of our operating companies. You see how these cohorts, although they taper off slightly, they're really still very important. Even clients that started with us prior to 2018, still a lot of them are still active in 2024. That's good. One way to quantify that is with that %, that bar that you see at the bottom, the dollar client retention, which has hovered between 80%-85%. This is the average of GR on the one hand, and communications on the other hand.
GR, typically, retention is sort of low 90s, and public affairs has a bit more project work in it. You're talking more about high 70s, low 80s. This is the average. You see that perhaps in 2024, actually, it's taken up to 80%, and that's directly attributable to public affairs being down in 2024. That's how I expect, this is not a projection, but I wouldn't be surprised if in 2025 that number goes up again. Now let's go back to, after all the top-line analysis, let's go to the bottom line. Actually, one thing that I forgot to say, of course, at the beginning was these are the trading update. These are not audited numbers yet, audited is currently in full flow, and mid-March we'll present all the numbers with all the footnotes that you like. Here's our profit.
The profit picture is, as you know from us, we really track underlying EBITDA. That's a very good proxy of cash because the only thing that we further pay from that is some interest on debt and tax. Our investments of working capital are de minimis and CapEx is de minimis. You see the trend, and you see especially a steep growth curve between 2018 and 2021. 2021 was really a peak year for us, for two reasons. It was the first year after presidential election. That's typically a very strong year. Plus, it was post-COVID. With all the COVID money flowing through the market, there was a lot of project work in that year. The good thing is that in 2022, the revenue still held up very well.
You see that profit came down a little bit in 2022, and that was our first year as a public company. We've made all the necessary investments as a public company and also made some investments in holding company. We started really growing again from there. In 2024, you see that we recorded $36.1 million of EBITDA, which represents a margin of 34%. As I wrote in the RNS, that number is a bit colored by about $3 million of incremental one-off costs that I had to highlight. Normally we're really of the type to say, all right, EBITDA is EBITDA. We throw everything in, and we're not going to talk about but fors. Here I am going to take the opportunity to add one but for, and that's the $3 million of incremental one-off cost. What are they?
About $2 million of that was attributable to M&A related costs. We did our first international acquisition, which required us to really invest quite a bit in advisory on infrastructure and advisory on the transaction itself. Plus, under US GAAP, we have to take all the other transaction costs through it. That means, all the acquisition of debt costs, we have to take through P&L. The stamp duty here in the U.K., we take through P&L. FX conversion, we take through P&L. All of that sort of accumulated in 2024. It's not going to mean that we'll never have that again, but not to the same extent going forward. The other part of our $3 million was Concordant. That's the internal startup that we had, which we knew that the first year was not going to be possible.
That's now on track to basically be neutral or profitable in any case in 2025. In 2024, it weighed a bit in our results. 2025, but for those $3 million, then our profit would have been $39 million, and that's a margin of 36%, right in our sort of sweet spot band that we've always communicated about, that we expect our margins to be between 25%-30%. Now, I promised one good news chart about 2025, which I really want to take you through now. I'm excited about this. We had a summit with a lot of our leaders at the beginning of this year, and the energy was really going through the room in an incredible way. Actually, many people couldn't really even attend because there was so much new business that was coming in. We're really having a lot of momentum right now.
Much more than what we had same time in 2024. Of course, the outcome of U.S. elections plays into that. Many people have to reset their agendas and their policy communication. Further, number two, we'll have even more focus on internal collaboration. We know that that's a good driver of value and growth. Last week we announced the appointment of John Green as our Chief Client Officer, and one of his key briefs is to further foster collaboration between our companies. There is the reduction in these one-off costs that I talked about. We won't have as many anymore in 2025 as we will have in 2024. Finally, the acquisitions that we did last year, and now of course with TrailRunner, they will start to feed their results also into our overall results.
Therefore, we have a lot of reasons to feel good about 2025. Now I'd like to hand it over to Thomas, who's going to talk about the media again.
Sorry. I'm sorry for overstaying my welcome on stage. Two things, just clarity, because some of you hadn't met us before. He mentioned Concordant in the startup phase. This is the first time we launched a brand. It was about that collaboration, but also a bit of a conflict mitigation, as well as sort of having a stack of talent and advisors that sort of pitched in a slightly different outside Washington Beltway. How do you take the talent and the depth we have and begin to offer new services through a slightly different brand? Concordant, which is the tying together of knots, obviously, is a good example of that and is well worth that investment within the first year. Key client programs and the new Chief Client Officer is not a net new person.
It's a longtime business partner of Stewart . Someone that knows the vernacular, knows the game, and knows where all the bodies are buried across the Group. He is raring and going. He's been with Stewart Hall for what? 30 years?
Too long.
Yeah, okay. I'll leave it at that.
In here, it was 30 years.
You're right. John Green, if you continue to follow our story, you'll probably see him pop up somewhere. He's eager to come here to the U.K. again and dig in with Ollie. I'll also say, you might have noticed that Ollie just slipped away with his coat. He's not leaving in protest. An example of this cross-selling is that today, right now, or in about 15 minutes, Mat's team at CRS and Ollie's team at Pagefield have a webinar, essentially, that is, last I checked, about 110 folks coming to it, that is talking about foreign direct investment opportunities. Research that was done here, sort of digging into that area and presenting it to the States.
That is an example, in this case, thought leadership, but direct to clients and prospective clients on how Pagefield, in this example, can really tap and take advantage of the D.C. connectivities and really try to expose both the new geographies and new faces of experts. I mentioned the 10% referral. It's not just people wanting to lace the bonus pool, right? That's the end result and very helpful. This keeps organizations like Cassandra's and like Pagefield, Ollie's group of, clients are saying, can you do more online advertising? Or, can you get into research? Can you get into? It 's really for a sub-scale public affairs or any organization, it's hard to do the and, without sort of diluting the margin significantly or having sort of a one-off researcher or a one-off digital strategist.
We can begin to look at these sort of horizontal applications. Clients need us in places, but it may not be, w e want to focus on expertise. We want to have the best policy person for energy, the best crypto expertise, et cetera. Meanwhile, the things that really require scale, both from a talent and execution perspective, are things that on the horizontal, be it white labeled through one of the 10 brands or just as a PPHC function. She mentioned research. Research is a great way of opening doors. There's a lot of bad research in the market, though. How do you ensure as a, dare I say, small or medium-sized Sacramento business, you really are bringing the best to your clients? Because otherwise it's going to be a losing game.
The number of organizations of the great and perhaps a little bit sassy. When you go into a GBP 5 million agency or firm and you say, wow, you got 18 specializations. You got 18. So we do this. You got 24 people. How do you end up accomplishing all of that expertise with so few people? It's just we're going deep in the swim lane that we know and taking advantage of where there is opportunities for scale on the horizontal. We mentioned the summit. It's not just about one summit, but really we are small enough still, that people need to know names. People need to know that Cassandra is who you call in Sacramento, right? It's not just about encouraging it, but it's about putting her with all of these. I'll tell you, we had 75 people of our leaders, in Miami.
It is well worth every dollar we spent on that summit. Not only getting people out of their organizations, but encouraging them to say, like, forget about your brands for just a minute. Even forget about your existing portfolios. What do you need to full growth? What in this room? How do we repackage? How do we look at shared talent investments, shared geographic? All of this. Employee summit is just part of the ongoing sort of connecting the dots for what is a very talented organization. You'll all ask it, so I throw it in here. It's early days on AI. We do not feel like the lobbying and high stakes communications work is going to get eaten quite the way that our friends in, call it more consumer or commoditized services will.
There's a hell of a lot of interesting stuff that we can be doing from testing congressional hearings and monitoring things, and AI empowering it is going to be. We're not taking bets on saying, here is our one AI solution. This is a let a thousand flowers bloom and figure out where then you need to hone back and put the fertilizer on it. This is really an interesting time for all the individuals. One of the few outputs from the employee summit is really understanding the select things that we can bring to bear within the organization. What partners can we bring to scale and really start establishing best practice for the use of? The other way of this is AI as a policy opportunity and challenge.
What's happening here versus in California versus Brussels versus will it be conceived at a D.C. level as to how these things will be regulated or enhanced? This is major opportunities for all of our clients wondering what that next thing looks like. Strategic pricing and sourcing initiatives, that's probably the least interesting for me as the strategic officer. Nonetheless, there is benefits of scale here from a U.S. perspective, just taking healthcare and the shared opportunities. Like taking some things off of Jim Wilkinson's plate here, who has 80 employees and wants to be client-facing. Those sort of synergies, both on the pricing and then again, sort of within the initiatives that we can build from the scale of the organization writ large. It doesn't take a unibrand to do this.
It takes a collective consensus around what the strategy is and an understanding that all boats will rise. Where is the operational leverage here? I think this will be, at this point of the presentation, getting into a bit of recap. We do have a unique position. We go back to that list of lobbying shops, 2,500 long, 2,400, I think is the actual number. Having three of the top 20 that's been atop the market for five years, that's our moat. That is the depth of policy expertise, that 90-odd percent retention rate that is unrivaled. We're very proud of that. That said, we always need to watch our home teams and ensure that we are staying well ahead, as well as within the transparency regime. We really believe by extension of that in our multiple brands. We have Cassandra and Don na and t heir team in Sacramento.
There is no reason to fly a PPHC flag or a Crossroads Strategies flag there because people know LPA. Yes, LPA powered by PPHC is that sort of wink and a nod of how you get to scale while also ensuring that you have the benefits. Early on, again, in Stewart's origination, is this brand, this sort of family of brand would be most impactful in mitigating conflicts. When you put every dollar and every person and every conversation on the federal register, there's a degree of which Coke and Pepsi doesn't play together, or Boeing and Airbus doesn't play together. How do you sort of conflict swap in order to capture the biggest market? As we've grown both from that specialization and just sort of realized the potential of what we're underway with, you retain employees a lot better in smaller organizations.
You have cultures specific to the wonderful women that run Lucas. You have a Crossroads Strategies that's different. You have a Crossroads culture that is different from an Alpine culture. We retain employees roughly at twice as much as our rivals. If you say, the average PR employee floats through at 25%-30% sort of churn rate on the employee basis, we're less than half that across the disciplines. That's important in order to keep your perch with that CEO, with that issue expert. You can't be calling folks and saying, got a great client lead for you. Don't worry, it's going to be fine. I've made many of those calls in my day. I'm happy we don't make many of them these days. At the same time that we believe in the brands, we are not just adding brands so you can see more logos.
This is very important to note. We are not just stacking revenue. We're saying, these are the swim lanes that we are in, keeping to our knitting, and understanding how things can play together to avoid that duplication while offering some of the shared services that we spoke about. We are more and more focused on this upskilling. We don't believe that we're going to be replaced by bots, but at the same time, you've got to keep your talent fresh. You've got to keep your tech partnerships fresh. You've got to keep your infrastructure fresh, such that you're ahead of the game. Obvious tailwinds here. Anyone talking about trade and tariffs these days? It's a big one. It's going to be a big, big, and global business driver for us at all levels of the business. Global energy transition and expansion.
It was a careful note by one of our colleagues on the expansion because is the energy transition still happening? It is, but perhaps the windmill is not the best graphic to be presenting here. AI revolution, I've mentioned about. Then finally, this is where the federal, state, and international chessboard works together. If you are sitting in the C-suite of a global Fortune 100 business, you have fires everywhere. You can either go to a unibrand that has folks everywhere but may not be connected, or you go to the best people in the market. We want to be the latter, and we want to ensure that those best people have the access to the scale that PPHC can provide. The M&A hunt is on, both against specializations and geography.
To the point here, and this is getting a little into the financial leverage that we have as Roel described. There is a compounding value here as the client portfolio grows and the expertise grows. We are deeply embedded. We have strong, sticky scopes. There's an attractive return on capital for each $1 we spend and incredibly low CapEx. We are people in office space, and the latter of which is not nearly as important as it was five years ago. Every deal is a new challenge and opportunity, but the acquisition playbook, from everything from pipeline development right through to getting them in Washington to meet all their new colleagues, we're building a playbook here. Everyone's a special snowflake. There's no question about it.
At the same time, the market out there is ripe for consolidation, not only against the 2,200, 2,300, 2,400 lobbyists, more so as we see every day, there's a new deal in strategic communications. Happy that we were the one in the headlines this week, there'll be another next week, I assure you. As we get more and more word out there, four years ago, no one heard of PPHC. We're still deliberately under the radar. Our brands and our people are the front of the page. At the same time, as we speak to private equity, as we speak to entrepreneurs, as I work my way around London, Chicago, California, et cetera. They're beginning to see, oh, right. You're the ones who, isn't it? That's a very important milestone that
I would say maybe a year ago, we just started feeling that feedback loop on, oh, right. I remember. You're the ones that are listed in London. Of course, here, the capital discipline, with the investments. These are EPS-accretive things, here we have a very strong balance sheet, as you'll see, we are ripe for enhanced growth. Quickly here, I'm going to focus mostly because you've met some of these folks, you can read the numbers. Some of this, the ones that are most recent, obviously, have not been a full year with us, so therefore, we don't have a full set of data. I want to focus on this. This is both back to my story of how Stewart and I connected and really began to grapple with this.
We not just ask, but we insist that all of our founding or cap table present entrepreneurs say, okay, I get it. You want to be with us forever, wink and a nod. Who's your next? Who's the ones that are going to carry it forward? Not just from the hit the bus scenario, but how do we really build succession planning into these small and medium-sized businesses that have been principally founder-led, reputationally driven. From KP probably has 25, 26 employees?
35. Okay. Second generation of ownership. MultiState, third generation of owners. They brought 13 people in the engagement. Doesn't mean the denominator was 13 against the closing payments. That means against the terms of the deal, the earn-out payments and such, unlike in my previous example and Stewart's and many others, it's a clear thing. How do I keep you as a bright and shiny sort of mid-tier career? You get them involved. You get them involved in the cap table, in the deal to say, in two years time, if we grow X, you get Y, and it continues. Again, LPA, they brought six across the line with them, and all of them will be here for a long time. Pagefield brought 10. I walk into that organization now, it's only 35 people. I say only.
They all have a sense of ownership and a clear idea of where they're going. Much to his credit, Jim, who you'll meet soon, this is the sort of ending act of our party today, will be 10 managers, and I think some would be young, bright, and shiny, and some are people who've been with him forever. You've got to keep the people whole. They are the ones who wake up every day and worry about the clients, and you've got to have the book, the currency, and the culture that supports it. Finally, this is a really interesting market. After call it 15 years of high-stakes crisis and financial comms being convinced that they all need to become ad agencies, it's reverting back to where do you get real expertise?
Where do you have a focus on either a sector, an issue, or a geography that matters, and where do you drive both client results and margin to the bottom line? Terms of earn-out payments before, we've talked about this is really a change of this opportunity funded through cash and the all-important share. We have ample room here within our debt agreement that we are only at one and a bit times leverage now. We can stay well within this range and meet that trajectory towards the goals that we have set out for the medium term. It's pretty clear in the caliber of the folks, I'll just say, I love all the folks that were on stage with us today. We have a rule that you got to like the people, because the only way I'm going to bring you my client is if I like you.
The criteria here, yes, there is the ethical best in class, especially on the lobbying side. There is sort of diversification benefits in the market share. There's premium profiles. I'll tell you, all of them come back to no asshole rule. That has been, I think, again, Stewart's point from moment one that I met him, and now 10 years later, I am, dare I say, proud of us for having not violated that rule. Geography and issue specialization. That's the matrix we've spoken of since our IPO, and it's very clear. I live in New York, as does Roel, I got to get something in New York. We've got now 20 folks with TrailRunner that sit in Manhattan, and I can't wait to join the office there.
From a government relations, Albany, New York City, it's very clear, much as I said with California, we need to be there. We also added, because Jim is based in Texas and has a very good team in Texas, we got to add the public affairs and lobbying element to that geography. We don't want 50 dots on the map. We've accomplished that through MultiState, where are the headquarters, where are the critical mass of either individuals or capital that we need to have presence in these markets. I'll add Florida to it. We are keen on the EU. It's a tough place to make money from a firm perspective. It's like, is it a build or a buy? Our clients are asking us to figure out the EU equation and beyond. We're looking at the Middle East.
We are just at the beginning of this journey across all the industries that are ever more dependent on, and impacted by the work of government. Very quick in the economics here. Upfront payments. That is, you got to be competitive with it, right? Especially in a PE-driven world that is evolving and upping the expectations of everyone that have a client. At the same time, you can't just deliver it all upfront. This is one of the many good things of our past experiences are earn-out, but are driven by profit growth. You got to grow to keep the money going. In our case, it's again, a broader set of stakeholders that are within these organizations. Broad stance here, it's a blend of mixing cash and shares. Next generation I've mentioned, each payment is conditional upon continued employment.
There is that reality of a vesting cycle, against the shares that keep people whole, as well as keep people thinking on more than just the end of their deal terms because the vesting tails keep working. This is a sort of competitive space. As I said, PE is getting this in some areas a little higher. We are not afraid to get into auction processes. We do not necessarily win, but you know what? That is okay, because this model that includes all these factors is somewhat, as Roel likes to say, self-filtering. Someone who just wants to put in their two years and get their check is not someone that we want in the portfolio. We can be pretty clear about that.
Just by sort of offering this tier and this sort of share vesting cycle, you're pretty clear on where the incentives go and whether there's longevity in the asset. We're insisting on a lot of these things. Again here, what do you owe in earn-outs? Roel will get more into this in a previous round of our results, we really sort of dug into some of this number because it is, as you have a ccretive strategy. Right now we're looking, I'll let Roel get into more of this if he has questions, as you look through the 25-30 commitments, right now, we're well within the bounds of what we can do. We are highly on the hunt for more M&A, we're not shy about it.
We're not even shy about our private equity competitors, because I think we're telling a different story. Sir, back to you.
Thank you. I have seen that actually earlier in the communication colleagues that shuffling across the stage is the thing to do, so I'll try to do that as well.
No one's ever sitting in front of millions of screens at the same time, so you're still the favorite one.
Exactly. Let me pick it up where Stewart at one point left off, and that is this medium-term plan. I want to talk about it and what our ambition looks like and how we could fill it up. What's the possible pathway there? The medium term that Stewart described was, hey, further geographic expansion, further capabilities, adding technologies that make sense, non-duplication, and deepening research compliance data services are sort of the things we're focusing on. Indeed, we're laying out this target for ourselves. Nice round number, $500 million. That's really where we think we can be in the midterm. Before I lay out qualitatively what that could look like, I think I want to call out a couple of really vital ingredients that make the engine run.
First, it's about a company because when I am in your shoes, and actually I am in your shoes because I'm an investor in this company as well. What I love about it is the stability, almost the predictability. We have this combination of low political dependency, right? We're not dependent on which color is in power. We are bipartisan. For us, the engine will always be humming. We have very low client dependency. We've got a very high level of employee ownership, which really creates stability in the workforce. To conclude that, yeah, a very high percentage of retained work. You saw the client retention as well. I should have probably add that to this list. That all creates a path of stability. The next very important ingredient is our public company status. We love it.
Although, of course, it comes with some annoying compliance things and reporting. We love it because it really brought us a lot. Of course, it helped us to put in place good governance, good reporting, all that. Really, it also helps us in the long run to maintain that employee ownership whilst also transitioning people out who want to retire and bring new management in, and much easier to do that in a public company setting than if it's private. Secondly, being public, it gives us the ability to use our stock as an M&A currency. We haven't done too much of that, because to be quite frank, at current price point, that is too dilutive, too expensive. If that ever changes in the future, which we do hope, it might also get used more as an M&A currency again.
Of course, one of the ways to get our price setting more effective is by having more liquidity in our stock. That's one of the reasons why, also in the announcement on Monday, we alluded to the fact that we're going to pursue a second listing in the U.S., which will also open up the doors towards approaching more U.S. investors, because we believe that those are two keys to getting more liquidity in our stock and hopefully therefore a more efficient price setting. Those are a couple of very important ingredients. Now let's go to that target of $500 million, right? Now we're coming off $77 million in 2020. That was the year pre-IPO. Right now we're reporting $150 million for 2024.
Really we're almost at a run rate of almost $180 million if you include TrailRunner and take into account the full year impact of Pagefield and Lucas Public Affairs. How do we get from the $180 million to the $500 million? Some of you might model it. Of course, I model it too. There's a couple of things you want to take into account. I will say these are potential pathways. Our legal counsel told me, Roel, please emphasize this is not a projection, this is an ambition, and this is a pathway to getting there. Of course, organic growth, that is the key. As long as we keep growing organically, that's where the value creation magic happens. We still believe that 5%-10% is our sweet spot for organic growth, and we'll continue to further enhance that via, as I said, amplifying internal collaboration.
There's acquisition growth, because yes, M&A is part of this. We're not in any of the fuller sense acquiring for acquisition's sake. We need to have the right targets, and we need to be able to get them at the right terms. If that happens at a rate of about $35 million-$50 million of revenues each year, that will get us in a sort of disciplined way to a size of $500 million by 2030 plus. $35 million-$50 million, that represents, if I look back, probably two to three acquisitions a year, but there might also be a year that it comes all at once if there was a bigger target that we would bring in. We expect prices to still continue to hover in that range of 5x-8x profit after tax. Let me just also stipulate profit after tax.
That's the multiples that we're typically looking at because frankly, a dollar of EBITDA in California represents very different value from a dollar of EBITDA in Texas or probably in the U.K. We're able to still convince people to come into the group because we're giving them this earn-out that allows them to also get that same multiple on the profit growth over the next five years. Now, typically, these companies that we bring in, we expect them to have an organic growth, again, between 5% and 10%. Actually, typically, acquired companies you would see a little bit more growth than the legacy companies, because they're really starting to enjoy the network effect and the impact of that. EBITDA margin for our legacy companies, we're clearly targeting them to be between 25% and 30%. That's always been our guidance.
Through disciplined staffing planning, we'll be able to manage that really quite well. Oh, sorry. These acquired companies, we don't know yet, of course, with which margin profile they come in. Typically, we only look at, we're only interested in companies that have really good margins. We're not really geared towards facilitating startups. Probably Concordant is the one exception. If a company has a structurally low margin, that typically means that either it's in a highly competitive environment or there's just not enough value add, and then it's really not of interest to us. We believe that most of the acquisitions that we'll bring in will always be also in that 20%-30% margin range. Well, we're generating a lot of cash, talking about debt. We'll also need that for making these M&A opportunities if they come on our path.
Therefore, we've now announced that we're going to rebalance our cash flow use a little bit and pay out a little bit less in dividends. I'm going to talk more about that on the next page. Just as a reminder, we used to be paying over the past three years since IPO, we used to be paying about 60% of our underlying net income, and that means we have 40% left for things like M&A, debt service, investment in working capital, CapEx. We're now rebalancing that a bit by reducing the dividends that will go effectively from 60% payout ratio to more like a 30% payout ratio. More on that on the next chart. First, finalizing this. Yes, we might still need some extra debt along the way, but the way we've modeled it out, we're able to maintain a really prudent debt to EBITDA ratio.
We're targeting at max, as it was one of the prior charts, 1.5: 2. Right now we're at 1.2. Actually, no, it will be at 1.2 on April 1 after the acquisition of TrailRunner. That ratio will immediately start to decline in the rest of the year as we start to immediately pay off debt plus build up cash alongside. Maintaining a prudent debt to EBITDA ratio is important to us. We are a professional service company. We're not going to do anything PE-like with debt ratios of 4x or 5x . We're not comfortable with that. Even then, these are just a number of assumptions, none of them really outlandish. Doing this for a number of years will get us to our $500 million, and just a matter of good management.
Now a point about the dividends. Why exactly do we want to reduce dividends? It's not because the company is in a bad shape. Not at all. On the contrary, I would say. It's really because we see so much opportunity to redeploy all the cash that we generate in a way inside the company rather than immediately returning it to shareholders. First of all, I'll take you through the chart that you see on the right, that little table, because it gives you a bit of a feel for our numbers. You first see top row, underlying net income. We should be reporting, let's say, somewhere in the mid-20s, let's call it that. I'm just going to round it here. That translates into operational cash flow, which is also very close to that underlying net income. Once again, let's call it mid-20s.
You see that in the past two years, we've been spending actually all of that and a little bit more on acquisitions. On top, we also spent $16 million-$17 million on dividends. You can see already that when you sum all that up, we had to attract some new funding, which we've done in the past two years via attracting debt. This is a picture that we could probably go on with a little bit longer, but we like to rebalance this a little bit. Therefore, you see from the symbols on the 2025 column.
While at the top line, operational cash flow will continue to increase also because of the acquisitions that we've made, we will reduce our dividend, 2025 going forward, and probably attract a little bit less funding from the outside, so that we have enough cash to spend on acquisitions as and when we find the right opportunities. There might be a time then, I want nobody to be concerned that management is going to squander the cash just because we have it on the shelf. We will always be very disciplined, and I think we have been so far in terms of only deploy cash when it's really the right thing to do. If we have excess cash, there is not an immediate M&A opportunity, we'll do all the things that the typical capital allocation frameworks now are available to us.
It will either be, well, leaving it on the shelf, paying down debt, initiating a share repurchase program, or we might do a special dividend. All of that is available to us, and we'll review that together with our board every time. One thing that I hope you can take confidence out of is that actually the largest share of the group, which is management and employees, they're very much behind this proposal to reduce dividends. For employees, this is actually a big thing because for some of our employees, the annual dividend income is a substantial part of their annual income. We've seen broad support to basically reduce that annual income, to some extent, to basically allow the company to grow further and faster. We're thrilled to have seen that support internally. Final point about this, how do we implement it?
I think you will have seen the analyst reports. They all got this right. Our plan is to have the next upcoming dividend payments. That will be in May 2025, and it's really our final dividend over the results of 2024. That will be 50% of the previously anticipated amount. All the future amounts will be 50% as well. After this reset, we will resume obviously progressive dividend policy again, which in the past we've done 2% growth, and we might well continue that. First, we'll reset the dividend expectation by 50%. That was the end of the financial section. I hope that you've seen that this sort of a nice, disciplined approach and balance between organic growth and M&A growth, we will be able to get to our $500 million objective.
Talking about M&A growth, I'm really thrilled and delighted to bring Jim Wilkinson on the stage. Yeah, Jim, it's your turn.
Thank you.
Who's the Executive Chairman of our newest family member, TrailRunner International, Jim, please.
Thanks so much. Hello, everybody. I'm from the kingdom of a wonderful place called Texas. We'll hopefully have some fun. I want to introduce Georgia Walker, who's here. Georgia actually founded our New York office, lives in London, now running London for us. This is me. You'll recognize her. She's quite a famous footballer. Those who follow football. She has actually written a book there. If you buy, well, all profits, she and me will both profit if you buy it. She was one of the leading fighters early on for women's equality in football here. Maybe you're a wonderful person. Glad to have you in our firm. Why are we called TrailRunner International? Because the LLC name was available. It was legal. We liked it. We like to go international. I live in a place where some people drive to international travel. It's called Oklahoma.
My whole career has been spent being very global. I previously was in the White House. I was Deputy National Security Advisor for President Bush. Spent a lot of time at Number 10 in different areas here and all over the world. I went to Chief of Staff State Department and wound up being Chief of Staff to Hank Paulson in 2006 because nothing was going to happen. It was going to be quiet, and I was going to have a big time job at Goldman Sachs when it was over. 2008 happens, and I wound up with your Alistair Darling when he told me, Please don't bring your mad cow disease to London. Yo u're a wonderful regulator. We're very global people, everyone in our firm. We do believe we're a part of building a growth platform. Look, I'm an investor. Okay? I'm like you.
Words like very, extremely. I don't know what that means. One, three, five, seven, nine. I like numbers. I'm a data person. Okay? I see a lot of heads nodding thankfully the right way there. I look at things, can I be here for years to come and be coming back here a lot of years? The answer is yes. We had a lot of people looking at our firm, I wanted to be with this team, and I'll tell you why. I want to know what's happening inside the industry. I'll stop my commercial and just give you some clinical data of what's happening inside of the communications industry globally before I tell you what we do. Number one is this collision of factors. When I went to business school, we were taught government affairs and comms was a cost center.
You spend money there, that's the first thing you cut when there's a problem. Okay. Financial problem or a mega-trend. Those days are over. We've now become the spinal cord of the P&L. I previously was at Alibaba Group. I led the biggest IPO ever, worked for Jack Ma. In China, the two most important parts of the company are HR and communications because they know it's the spinal cord of the profit center. The legal, finance, international relations, communications, sports, private equity, you name it, they've all collided together. The problem is, in our industry, most people, one of my favorite MMA fighters is your great Brit, Michael Bisping, who is from here, as you know. All of you are investors. You have to do multiple things. Our education system on the comms side teaches people just to do one thing.
You've now got a mismatch of talent with the actual problem they need. When I left the Alibaba Group nine years ago to start this firm, I wanted to play in that nucleus where those collision of factors are, because that was where the high margin business was. I had 17 agencies on retainer there. I was on the buy side. I was in your seat. Okay? I ran comms at PepsiCo before that, so I had a lot of agencies. I saw the good, the bad, and the very ugly. The second is the large firm business model. Look, they're dying. It's not because they're bad people. I take no glee in that. They're dying because the business models were built. They're making buggy whips when the rest of the world's buying cars. Okay, that's just what's happened.
They're locked into archaic business models that don't work. Okay? You read the paper every day, the hundreds and hundreds of layoffs. We were one of the only firms that was actually growing in our space if you look at financially. It's not good out there. That model, agency of record, at least in the U.S., it used to be that a big company, a big Fortune company said, look, I want to hire you to represent me in 20 countries or in nine states. No serious adult does it that way anymore in our industry. It's just not happening, okay? No one firm can do it. I was at a firm called Brunswick Group. I was managing partner there, worked for Sir Alan, spent a lot of time here in Lincoln's Inn Fields, we tried to say we can do it all. You actually can't. Okay?
You just can't. I, as an investor, like people that try to be things that they're not, and you actually can't be that. This idea of the agency of record globally just isn't happening anymore. Okay. That's important for you to know. Branded house versus house of brands. I was at PepsiC o. I had 22 brands that reported to me at Brunswick. All right. Pepsi, Fritos, Doritos, all those kinds of brands. We had this debate, are we a branded house or are we a house of brands? Okay. That debate's over. Our brands are our people. My assets go home every night. Okay. I got to get them as a leader, a business leader. I'm a military officer by training to come back tomorrow. I got to try to get them to come back tomorrow.
Georgia and Niamh, I've got to get them to come back tomorrow. Our retention has been very high. Very few people ever leave us, thank goodness. I'll just tell you that our brands are now our people. It's the frontline individuals more than ever. Okay? The big name doesn't matter anymore. What matters is Georgia is the big name. Niamh is the big name. All right? Youth of industry. I'm 54 years old. I have a lot of energy, but when I grew up, we were expected to run something in our 40s. That was what we were expected. Okay? In our industry, they're expected to run something in their early 30s. Okay? That is a systemic change in the industry. Okay? Some of that has to do with natives versus immigrants in terms of social media.
Those of us who are 50 years or older, we're always going to be immigrants. Georgia and Niamh are native to it. Okay? They're just native to it. All right? Just understand the youth of the industry is more than ever. One of the reasons you should be, I think, excited about us is I have a deep team. I would say the best in the industry of young future leaders in succession planning who are doing fantastic things. The submarine that blew up over the Titanic. Okay, we all saw that. That was quite the show for a while. They called me within three hours of that sub missing and asked me if we could help. I said, well, we don't really have a submarine recovery division.
We're a PR firm, but happy to try. The person that ran that is 27 years old, just to give you a sense, okay, the youth of the industry there is different. When you're looking at investing in PPHC, and I had to make a decision when I joined up with this band of merry elves or not, I looked across all their companies. I saw people like this lady here who were seasoned veterans like me, but I also saw a deep, deep bench of young talent because I have a 10-year-old, a 12-year-old, and a 30-year-old, and I'm going to be here for a lot of years. All right. I had to be where I could go be there. All right, big squeeze. This is important, especially as investors. This is just what's happening. Happening at two ends
At the young end, a lot of young people bought the lie they were told during COVID. I would never have to go back to an office. I could never wear anything other than pajamas. I could make millions of dollars and have a career. No, you can't. Okay? A lot of young people are actually disgruntled. Right now, if we go and find talent, it's actually harder to get hired for us as an intern than it is to get hired as a senior person, because I've got to get those young people and develop them up all the way through the chain. Just understand there's a crisis in young people. We're actually competing against the right folks there.
At the senior end, there are a lot of very tired people, very old, tired people who say, I just don't want to win business. It took me a while to hire a head of New York because they would say, I just don't want to win business. I just want you to hand me clients. I'm just tired. Okay. I know we've all been through a lot in the last few years. It's been interesting out there. Just understand that big squeeze is happening at both ends. I feel like we've got good talent in both those there. That is something for you to watch. The decline of RFPs. In the old days, it was all RFPs, request for proposal.
You would sit down with Procter & Gamble, RFP would set bid, you would compete against 30 firms, and it would be a fair contest, and that's how it always happened. It's over. It's almost all private, especially in the U.S. heartland where I live. We've seen the biggest migrational shift I'll talk about in a second. Probably 100 years in our country of people have left the heartland and discovered that in places like Texas, we actually have Wi-Fi and telephones too, all right, and hospitals and Starbucks and things like that. Just understand RFPs are over. Okay? You still get big ones because a lot of compliance policies require those. It's a frontline, last mile. Am I in front of someone like Niamh or Georgia to get us hired?
They're doing one of the biggest happy hours I can't disclose yet out of London coming up here was just because they were here, okay, physically here. As you're looking at investing, you want to be with people that are in that last mile. U.S. heartland. Again, people are leaving the coast. Okay? New York always reinvents itself. Okay? I've lived all over the world. I've lived in New York. I've lived in California. I've lived in China. New York always reinvents itself. We've got to continue to grow there. California is a fantastic place. Don't read what you see in the paper. It's a wonderful place, and we have people in Northern California, and we'll continue to invest there. In the U.S. heartland, there's a whole new group of financial centers.
As investors, you should all read a book called, The New Heartland, written by a guy called Paul Jankowski. He discovered a skinny little girl named Taylor Swift. In places like Nashville and Little Rock, Arkansas, and Dallas-Fort Worth, Texas, and San Antonio and Topeka, Kansas, these are new financial centers. They're seeing millions and millions of dollars in jobs flowing. Lastly, it's human nature. Look, folks, we're all tired. People are tired after COVID. Human nature, as the great football coach over here in the U.K. said, human nature is to be average. We've got to go as PPHC and a show owner in a battle for talent to get people that frankly want to work their ass off and grow and use your money wisely and protect your resources wisely, and that's what we are. Some of our team here. I'll call out Seth Hand.
Seth is in the UAE. I have deep relationships. We are in Abu Dhabi and Dubai. If you know why, you'll know why, because of the MO. Seth has been out there for a long time, has a lot of deep connections. We have a strong client base there. I'll continue to want to grow there. You met Georgia and Niamh. Pat and I've known each other for 29 years. His job will be just working across the PPHC companies to get referrals. We've just been announced. We haven't closed. We've already had, I guess, a dozen or so referrals coming to us, just coming in. When they did the diligence on us, they had to call several of our clients to see if we were actually a real company with Wi-Fi and everything.
When they called five, the first five, three of the five wanted to hire them for government affairs on the spot. I tell you, the cross-selling is wonderful there. Just a sense. I'm Chairman of the firm. Jim Hughes is the CEO. Just a wonderful leader. What do we do? A lot of things. We do things like submarines going public with Titanic. We're the agency of record for Charles Schwab, official firm of the Dallas Cowboys. When litigation challenges happen, we're right there alongside them. Went to Super Micro Computer, did that deal, helped get government approval in 11 countries. Biggest tech deal in many years through Bain Capital. We represent Bain Capital in Asia. This is just a sense of what we do. Executive leadership changes. New CEO of Charles Schwab, we did that one. We're now their large agency of record.
Media relations, thought leadership. Essentially, as investors, you want to know this. We live out of the budgets of the general counsel, the CEO budget, the head of comms budget, more and more the marketing budget, and believe it or not, a lot of the HR budget. When Xilinx was bought by AMD, as you know, I think one of the best CEOs alive, Lisa Su. When they bought that, it was the biggest tech deal that was ever done. We actually spent a year running all of the integration as well. This is just some of what we did. Spotify's IPO. We did Levi's IPO. We took Black Rifle Coffee Company public. That just gives you a sense of that. Sports. I swore we would never make any money in sports.
Turned out we made millions of dollars in sports. I was wrong. We cleaned up and licensed, which, as you know, is a multi-billion dollar operation. Justice Department just approved their acquisition of ASM. We now do a lot of work in the It's called TrailRunner Sports in that sports area. I'll tell you some examples. What does that mean? Buffalo Bills came to us. They're a National Football League team. They need a new stadium. We helped them get $1 billion out of the State of New York for a new stadium. Wow. Arizona Diamondbacks baseball team came to us, said, we need $300 million to redo our stadium. We helped them get that. Several conferences, if you follow sport at all in the U.S., name, image, and likeness is huge at the university level now. We won the top case ever there.
We do crisis communications. We do business strategy, stadium renovation, media rights. We actually now negotiate. We have a guy on our team that negotiates media rights. We can do big conference media right deals, which I have no concept of how you even do that, but my team does, thank goodness. Those deals will be great in the years to come because we get big success fees off of those. Mergers and acquisitions. You in the Premier League, we're a little more advanced than we were in the NFL, but now the NFL is now open to private equity, for example. A lot of things. Sponsorship and naming rights, PR and media training. You've heard of Stanford University. We led all of their work at the Olympics this year. We had a team on the ground here.
Stanford won 39 medals, which is more than a lot of countries. All right, all across these sports areas, this is now huge, especially in litigation. Where we are. Abu Dhabi and Dubai. It says Dallas-Fort Worth because Dallas and Fort Worth are two different cultures. Again, I tend to get in the weeds there. It just gives you a sense of where we are. Our culture. As investors, I'll just say, because I'm one of you. I'm the one we win the day. We just try to wake up and win every day. All right? Everybody's looking for a magic widget solution. We just wake up, we work hard. All right? If you invest your money in us, we're going to be working hard for you and protecting that money and trying to grow it. We're disciplined.
We don't wake up and say, hey, why don't we go open an office in some crazy place? We write a plan nine years in a row. We present that plan to the firm, and we do that, and we hammer on that. Okay, we adapt, of course, but we live by the saying of priority versus pressure. You either live by the priorities you set or the pressures they put upon you. We live by priority. Focus on the fundamentals. Again, people give us money, we spend money, and we have some left over. Okay? We focus on the business fundamentals. If you're giving us, investing in us, we're going to grow your money methodically. We don't do crazy, silly spending. We don't try to go chase the shiny, bright toys. Matter of fact, when someone says this is definitely going to happen, we build the opposite.
Dedication to client service. Why have we been so good? We weren't Dora the Explorer, who just happened to find something that no one else did. We just work hard. We are dedicated to our clients. We don't worry about money. If we worry about money, we won't have clients or money. If we worry about clients, we're going to have clients and money. 82% or 83% of our business comes from referrals. From a physics perspective, crushing it and doing great work for the clients we have is a lot better than going and knocking cold doors. Long-term team growth and development. Look, I'll just be direct. In our industry, up until about eight, nine years ago, a young person like Niamh or Georgia couldn't join and work their way up to the top. You had to leave and go to PepsiCo.
You had to leave and go to Alibaba and come back. Okay? Right? The whole business model was, let's just throw bodies at the problem. Okay? That's over. Okay? Niamh can go all the way and run the organization. Georgia started as a very junior person, then she, out of her kitchen table, opened our New York office, and now she came over here to open London for us some time ago.
If you look at that team I showed before, they're all young people who've grown up in the business. Okay? All right. I think you've got to grow your own culture. You've got to build those people. Last thing is diversity. I'm sorry, when people say be united, I disagree. That may surprise you for a white guy from Texas to say that. I just completely disagree. All right? By the time a problem gets to us where someone's paying us a six-figure retainer, right? That's a hard problem they couldn't do themselves. I've got to have diverse people around the table. Okay? I've got to have young people. I've got to have older people. I've got to have experienced people. I have to have people from all different crossroads of this economy. Right?
In every office in the world, it says, diversity is power. It's framed on our wall. Okay? We believe it. Okay? I don't care if any paper says, right, I live in a world where I have to get a nice man or woman to give me money to solve their problem. When we do that, we're solving a problem with a diverse team of people, right? We're very proud of it. Thank you. Any questions?
I guess since Thomas sent me back up here, I guess he made a liar out of me. He made a liar out of me. No, just seriously. In conclusion, and we frequently come back to this chart. Many of you who've sat in these investor meetings with us and kindly given us your time, you've seen this chart before, and it's consistently outdated.
I think what, in riffing off of what Jim just said, too, the fact is that corporations, even here in Europe, and I always point this out, are spending more than ever now to manage their policy challenges. Their policy challenges are not separate from their regular corporate challenges. Jim just mentioned cross-referral synergies already with their company. What we find is connectivity to C-suite budgets, which is where all of our companies get their money from. Whether it comes through the general counsel or it comes through the corporate comms people, we have the connectivity at the highest levels. What we are doing and what we intend to do and what we will execute on is to make sure that our clients understand that we can simplify their lives, and not only that, have more success for them.
If they don't have to find 53 different vendors to manage to deal with the same problem, they can come to us and we can work. If you've seen anything today, these people work together. They may be in different brands, they work together. If you can see that we can make your life better by bringing all of these great assets we have together in a single teaming arrangement to work the problem, we will make your life better, you will be more successful, the CEO won't get bounced out, the board won't get replaced. That is critical. People are realizing it. You've all heard about KKR's investment in FGS that finally bought 100% of it from WPP. There's a lot of activity, as Thomas mentioned, in the sector. People know that this is really the place to be now.
Don't chase the low-end stuff. Get off the commoditization train and get back to things where the human is in the loop acting as a trusted advisor and strategist. That's why we're bringing all of these pieces together. Again, just quick takeaways again. You know about our margins. You know about the fact our clients stick with us. You know now today that the move into strategic communications has been a long-intended move. Jim and his team are going to bring our ability to build ourselves into that truly integrated vision that we had at the outset when we went public and again visited with many of you at the time. Frankly, we think again that that is going to allow us to, again, create better outcomes for clients.
We are going to stay committed to employee ownership because we think that is honestly our secret sauce compared to a lot of our competitors. Again, as Jim said, his creative assets are going home at night, and he needs them to come back in the morning, and that's what we're going to do. Again, you heard a lot from Roel about how we're going to get to the next level financially. I think probably the only thing I would say in conclusion to all of that is that you've seen what great people we have. Again, you often see the three of us in your offices meeting with you, and we again appreciate the time.
When you see all of us together, both from the management standpoint, the strategy standpoint, the people back in Washington and New York and Chicago you don't see that are working in our C-suite, and then the great people that run our companies. It really is an amazing collection of people. Thomas mentioned the, what we call it, the no A-hole rule. It has absolutely been 100% effective. We're really excited about the future. With TrailRunner, we're now PPHC 2.0. If we get to that $500 million, we might go to 3.0 but right now we're sticking in this lane that we laid out three years ago, and we're going to be successful at it. We appreciate it.
Absolutely. No more clicker.
No more clicker is necessary. It is always dangerous, especially in London, to be between your lips and a gin and tonic or your cocktail of choices. We are eager to serve you. I'm going to make an only rule here is that no questions about Donald Trump and politics. Let's save those for cocktails in hand, because God knows I need one. On the business, and this is inclusive of the operators that we have in front of us who are far more interesting people than we are. Just open to some questions here from anyone. I have a few that came in from folks that are joining virtually, but yes, go ahead, sir.
If you could introduce yourself and then your question.
Yeah, Chris Beaumont-Dark. I guess it's a question potentially breaching your rule about Trump. Because you were saying it's the nature of your work, perhaps more for Cassandra and Mat. You mentioned now the kind of change in approach, negotiating, everything's on the table. How does that, if at all, give you an opportunity? How does that change the kind of constructive advice and the way you interact with businesses? Because clearly that's going to cascade down from the top. Their interactions with public officials, regulators, all that is now a completely different nature because frankly, anything is on the table. What does that feed into the next four years in terms of how you have to adapt and how you can take the opportunities from that?
Can I get that from you, Mat?
Sure. I think from an opportunity perspective, it's incredible just because people don't know how to understand and make sense of this. People don't know how to take business goals and translate them to a new policymaking audience. I think the diversity of the team that we've developed, and I think across the holdco, the diversity of the member firms allow people the opportunities to have sets of eyes look at problems, who understand how this new sort of America First movement that Donald Trump is the head of is going to look at them. With that said, you said four years, two years from now, we're going to have congressional elections again, and we're going to swing back. I'm pretty confident if you look at how the last 10 to 15 years of American politics have worked, there's been a swing back and forth.
In that there is a lot of opportunity now, you also have to keep in mind that 24 months from now, less than 24 months from now, it's going to be a new paradigm in which people are operating. I think the fact that our firm has people on both sides of the aisle, and we were prepped for a Kamala win, we were prepped for a Trump win, we were prepped for really any outcome is really you've got to do it just because of the volatility that you've seen in the American electoral process for the last 10 years.
Mat, I want to just add one quick thing to that. As a point, again, we've frequently made with many of you privately, is that our business, because we don't do campaigns and elections work, and because we make sure that we're positioned with the right political mixes in every environment, we don't care. We all have our personal team we root for. As far as which party we really belong to, since U.S. money is still slightly green, we joke we're members of the Green Party. We are about opportunity to make business. The upheavals that Mat had mentioned, the agendas that come with political changeovers or with programs. Right now it's Trump's and the Republicans. It could be what is Hakeem Jeffries if he is speaker in two years, what is his agenda?
What is going to go with that, and how does that mix in with the DNA of the last two years of a Trump presidency? Activity breeds business for us, and that is, at least in our core business, it does. Again, the things that come out of Trump's mouth also gets Jim's phone ringing too because that creates corporate business challenges. Constant intersection between all that. We live in a world where we're prepared for all outcomes. We just like when the outcomes are decided, even if they only last two years in any jurisdiction. That's all we need to be able to help our clients and take advantage of that economic.
Hi. Samuel Dindol from Stifel. A couple of questions from me, please. Firstly, on M&A and the evolution of the business. I think in 2024, about 70% of revenue was government relations. As you do more M&A over the medium term, how do you map mix changes as it become more sort of strat comms, any sort of sense around that? Secondly, Thomas, I think you made a comment on European margins being lower and just less profitable. Does that limit your ability to buy firms there, or are there firms with margins within the range you would accept?
I'll start with the second. There's definitely firms, including Pagefield, that were in the margin of what we expect. I think what has happened here is that broadening that we'll do all things. We'll do this, and this, and this, and then it ends up sort of pulling down the margin over time. On your first one, someone else want to take the first question?
Yeah, no, indeed. Your question was will the? The weighting
Yes.
The weighting of the portfolio dramatically change? I would say it probably will shift a little bit towards communications, but not dramatically so because actually we like our current weighting, and we like to increase all parts of it. Yeah, I would imagine some shifting, but not dramatically.
I'm going to take one just because we're not buying them cocktails. I want to take one that came in in advance of folks that will be watching us. Given the size and liquidity of PPHC, why does it make sense to dual list in the U.S.? I'm going to give that to my friend Stewart Hall.
It was mentioned earlier, roughly about 75% of our shares are still held by employees. As a CEO, that's very gratifying because it means that those employee shareholders have bought into the vision. Even as their shares have been significantly vested, now 60% over the term since IPO, and they could sell them, they have not by and large. There's been some here and there. Obviously, we would like to, again, gratifies me to believe in the vision. From a standpoint of where we need to go, we need to get more free float, more liquidity. Our employees need to sell more shares. There's actually some technical barriers that we have right now that's living in two worlds.
Being a Delaware U.S. corporation, we actually do have certain securities rules because we're foreign listed, we have to comply with there in the U.S., and that means it severely limits our access to U.S. investment audiences. We can talk to them, but we can't actively solicit them except in very narrow approved circumstances. We certainly can't retail to the larger general public and individual investors. Again, we're dealing with some trading limitations and others. There's a lot of interested investors in the U.S. that we know do exist. Our shareholding is kind of rebalancing itself. It's always kind of been 50/50 Europe, U.K. on the outside to about 50% U.S. and Canada. We'll see where that goes in the coming weeks.
I feel like there's some momentum toward the U.S. anyway. You have to understand we're dealing with very small audience there, people that pay attention to EURO STOXX and things that are listed internationally in the small caps. Again, you just keep moving down the line, you find the smaller and universal interested investors who are willing to put the time in to do the research on you. We think a dual listing is going to be good for liquidity. It'll be good for our employees to get more of those shares out into the free float. Obviously, we think we'll lift all of your share prices if you're current holders or future holders. There was a hand up here that Yes, sir. Hold on one second till the mic. Appreciate it.
Eric, [Hillhouse] Investment. I was actually going to ask about the same thing, but just maybe to follow up, just having a secondary listing won't increase your liquidity unless you issue more shares or your employees sell some of their current ones. If you were doing that, you could probably do it in London.
Well, the fact is that, again, a number of our employees, because of affiliate rules and other things, and some of those are our larger employee shareholders, are limited in their ability to freely trade their shares in London. That would not be the case with a U.S. listing. As such, that helps. I think, if we were to see an appreciable share price increase in London, and that as Roel mentioned earlier, we could start using those shares for M&A purposes. In other words, we could raise money at a higher rate than the multiplier we're going in on our closing payments. Obviously, that changes the game as long as the demand side for that paper is there at that price. I think, it's a tricky walk. We don't intend to turn the ticker off any time soon here.
Our intention right now is, again, to pursue a dual listing. That does not rule out its challenges too. The good news is that we're not intending, if we do this, at least our early thinking is that we will not go and do an immediate fundraise and issue new shares. Instead, the intention would be to do the quickest route to that dual listing, which would be to simply make sure that we are in compliance with the exchange, they accept us, and obviously, we pass all those gating items, then you suddenly see a PPHC white in London, and you see one in New York. Then we see if we lift that boat, then we come back and visit with you all, and see if you're interested in a new issue.
One more that's going to be an easy, but I got to do it because I love easy questions. Why is TrailRunner such a good fit? Well, you just watched Jim, so I'll sort of start with that. The other is when I was doing media early in the week on the deal, I really emphasized his past. He was in the White House and Treasury Department. When inviting him to Washington, he had food recommendations. He knew the language, he knew the lines between a lobbyist and a public affairs. He understands he's not doing the consumer work that we love to consume, but it's not our sweet spot. I showed up, not to make this about my experience, but I'm answering the question. I showed up in Dallas, and maybe this illustrates that I was slightly unprepared.
I showed up, of his leadership that you saw here, I used to work with four of the people. I quickly was not only remembering, oh my gosh, three were Burson-Marsteller people.. You say like, that's a vernacular understanding to the point of the new A-hole rule. No A-hole rule, I will say, is that it's really nice to not have to build from scratch when you understand what you can look for people in the need. It's already been. We haven't closed yet, and four times a day, I'm getting, who in PPHC can I talk to about this? Who can I? That's what we needed to hit the ground running. By extending our capabilities, we checked all the boxes. Not to overwhelm him with praise because it gets dangerous, TrailRunner was such an obvious match for us.
Yeah, I think the presence in Texas is very important, because Texas is really an incredible growth market. As Jim puts it gloriously, it's a heartland, and that's true too. Further, an office in New York is something that we've always aspired to, and we have an office now, which is really filled with great people who know financial comms, the international sphere, the strategic communication aspect. I do want to highlight one thing, because when Jim had his chart up about sports, I could imagine that some people say, hey, Roel, what does litigation in sports have to do with policy? The answer is everything, because sports and politics in the U.S. is completely intertwined.
If you want to build a new stadium or you want to move a team from A to B, you're going to have to deal with multiple layers of municipalities and government, and that's why that interaction is golden.
I'm going to apologize for Americanism. I know it's sport and not sport when we're in rooms and necessarily in the country.
Roel's German.
Yes. Oh, there you are. Hi. Let's get you the mic so that we can hear you on video as well. Thanks, ma'am.
Thank you. It's Fiona Orford- Williams from E dison. I'm conscious of the time, so I'll keep it to one. You've talked several times about research data compliance as a resource that you need.
More sorry within the group. Is that something you need to grow in order for it to be the right shape, or it's something you can buy? Are you talking about something that can be a common resource, or is it going to be in one place or another?
At current, we've been growing in component parts, either through custom solutions here and pulses here. What we are looking and even had meetings this week, and then continue, the horizontal is really important such that you can provide the scale. Otherwise, the mix of CapEx that goes into data solutions, the talent pool, and we really need to be thoughtful about how we bring the full breadth and depth of the organization when looking at those kind of things.
Have you got to recruit to build that resource?
I think a mix of recruitment sort of outside of our comfort zone, in large part because there's a lot of political pollster people, a lot of political data people. It's a good match. It's not a perfect match for the corporate solution. How do you take what we know from our own sort of folks in the policy world, but really apply it to I really believe that government relations and communications people are sick of marketers having all the data. What is that sort of, maybe it's 70% much like the marketing data, but it is a different look at issues. It's a different look at stakeholders. I think it's a mix of inside, outside.
It is a vernacular issue that we need to satisfy the needs of our government relations and high-stakes communications clients, but we need to sort of look at what's happening in the marketing world and tighten it for their application. Great question. Appreciate it. Yes, sir.
Thanks. Hopefully the last one before cocktails. It's Kai at Canaccord. Just a quick one on the, I guess, multiples, right? You've been very fortunate of paying a very reasonable, many would say low multiples for your acquisitions. We also know that a lot of the PE deals with FGS, Roel, et cetera, have been done at sort of twice sort of multiples. If Roel being discovered or that space being discovered as a high margin, super valuable industry, maybe a bit like software 10, 12 years ago, and then all of a sudden, multiples go up because P is chasing it probably. Just wondering, what would you do in such a situation?
Would you be able to continue your sort of M&A strategy, or would you then I guess it's a hypothetical-like question, but just curious kind of how you think about the sort of whole valuation part of it to get to that $500 million? Thank you.
Yeah. Let me take that question. You say we pay low multiples. That might be true on the face of it, but if you think about it, let's take the TrailRunner transaction. Let's take the TrailRunner transaction. True. The $33 million upfront represents, what is it? About 6x EBITDA. I thought EBITDA because I know you guys love focusing that way. That's okay. That might seem very reasonable compared to KKR paying 18x profits for FGS. However, when you think about it, they paid 18x this year's or last year's profits. When Jim is at the end of his transaction, he might have also captured $17 million. Yes, there are some performance conditions to that, and he'll need to grow.
By the end, if he has captured $17 million and you compare that against today's profits, he will have a very, very serious multiple that comes very close to that as well. Yes, we have a different model than PE. PE pays everything up front, and then they hope that their exit multiple is at least the same or preferably higher. We're doing this sort of very long run, we can't bank on having a nice high exit multiple. Therefore, we want to make sure this is a long-term investment, and we want our sellers to be with us for the longer run. Jim is one of those folks, and I think he wants to comment as well.
Yeah. Just to build on the preceding into this, just as a data point. We're one of the few firms that were growing in our space in America. We had, I believe it was 23 offers. Private equity was begging for us. Essentially, what they were saying is, come in and clean up our mess. Because they went out and sprayed and prayed in general, and they threw together the [Bar team] and Star Wars of firms. They don't like each other. I actually had bigger offers for me personally, financially, if I would've just said, look, we'll pay you a bunch of money, no earn out, come in and clean up our mess so we can flip it and sell it. I said, let me get this straight. I'm going to say to Georgia and me, thanks for playing, but now you're a commodity.
I'm going to trade. I'm going to come in and clean up your mess, which is going to be the pain is inevitable, suffering's optional. It's hard. I'm going to trade for a boss I don't even know yet when you flip us out. No, thank you. For us it was where can I go with a 10-year-old, a 12-year-old, and a three-year-old kid to be for many years to come? Where can Georgia and Roel to grow? That's just the mega trend of the industry. I ain't a great guy. I'm not a Yoda here. I'm just telling you that's where the mega trend of the industry goes in terms of the high margin work. That's where you want to invest your money. Does that make sense? That's where the game is.
There's plenty of people that make the balloons and T-shirts match. That's just not us, okay? You can invest in those and make a little money. If we can't keep these two here for the next decade, 12 years, it doesn't matter. Okay? It doesn't matter. That's why we did the deal. I just want you to get a sense having been on the sell side of this.
That's a classy example. Maybe this is where we close. This is what Roel says, Thomas referred to it earlier. Our deal structure is not for everyone because we're building for the long term. If you believe in yourself and you believe in your employees, you understand fundamentally why we put this thing together the way we did based on our prior experiences. It is a self-selecting mechanism. We end up with people like Cassandra and Donna. We end up with people like Jim. We end up with a lot of new employees at CRS that are incentivized to come here because they're playing the long game. Mat is allowed to keep his talent bench refreshed as he needs and invest in the ones more that he needs to invest in. That is, again, self-selection. We're not in this for the short run.
It's not the easiest path. We probably could've had a nice paycheck by now if we really wanted and gone out and sold it. Again, where does that leave everybody else? Thomas and I saw it. We all got paid, and then poof, all of our employees were gone. We were gone. Nothing. That's not what we're building at PPHC. We think we're in the right space. We think we may have cracked the code on the talent retention and recruitment. Again, for all of you who came and listened today, for those of you who are existing investors or future investors, we really appreciate the time. Thank you. Now let's go get some cocktails.
Exactly. We're four minutes beyond. We're 30 minutes overall. Appreciate all your time.