Public relations firm due diligence

Due diligence on a PR firm is fundamentally a test of transferability: for every dollar of reported revenue, a buyer needs to know whether that revenue is attached to the firm or attached to one person who happens to work there. That test runs through retainer contracts, client-by-client account histories, the firm’s media contact systems, and — in firms doing government-relations work — a compliance check that has nothing to do with the quality of the client relationships at all. A buyer who works through each of these separately, rather than accepting a founder’s confident summary of the client base, finds out before closing what they would otherwise discover the hard way afterward.

Read every retainer contract for two specific things

Pull every active retainer agreement and check first for the term and notice period, and second for whether it addresses assignment or continuation on a change of ownership at all — a surprising number of retainer letters in this business are informal enough that they say nothing about either. A contract silent on assignment leaves the client free to treat a sale as grounds to walk without penalty, and a buyer should build a schedule ranking every client by size against exactly this exposure, because the largest accounts are usually the ones where a gap here matters most.

Separate retainer revenue from project revenue, client by client

A firm’s reported revenue often blends steady retainer fees with one-off project and crisis-driven work, and the two behave completely differently after a sale — retainer clients are a real base to build on, while project revenue from a single past engagement tells you almost nothing about what next year looks like. Request a client-by-client breakdown distinguishing the two, going back several years, and treat any recent strong year that leans heavily on one large project engagement as a much weaker signal of ongoing value than the same revenue spread across renewing retainers.

Check who actually owns the media relationships

Ask to see how the firm documents its media contacts — a shared, actively maintained system used across the team is a genuine asset; a founder’s personal phone and inbox is not, no matter how impressive the resulting coverage has been. Interview senior staff, separately from the founder if possible, about which journalists and outlets they personally work with, because the gap between what the founder claims about institutional depth and what staff can actually demonstrate is one of the most reliable signals in this kind of diligence.

Findings that actually kill these deals

• A retainer contract silent on assignment, held by a large client, combined with early signs that client is unhappy about the ownership change
• Revenue concentrated in accounts that only the departing founder has ever personally serviced, with no staff relationship behind them
• Lapsed or never-filed lobbyist registration for government-relations work the firm is currently performing, which is a live compliance exposure rather than a historical one
• A past client engagement that generated negative coverage of the firm itself, discovered during diligence rather than disclosed upfront
• Key senior staff with employment agreements that let them leave on short notice and take documented client relationships with them

Confirm lobbyist registration status directly, not by assumption

If the firm performs government-relations or lobbying work, confirm the current registration status of everyone doing that work directly against the relevant federal and provincial registries rather than relying on the seller’s description of their own compliance. Registration follows the individual, not the firm, which means a founder who has been personally compliant for years tells a buyer nothing about whether a junior staff member doing similar work is properly registered — and an unregistered lobbyist working on an active file is a compliance problem that exists the day the buyer takes over, whether or not the underlying client relationship is otherwise sound.

Confirm insurance and past claims history

Request the firm’s professional liability or errors-and-omissions coverage details and ask specifically about any past claim or dispute arising from a campaign’s outcome, a public statement made on a client’s behalf, or an allegation of defamation connected to the firm’s work. Communications work carries a distinct kind of liability exposure that does not resemble the risk in most small businesses, because the firm’s output is public-facing content that can itself be the subject of a claim, and a buyer should understand whether any such claim exists and how it was resolved before treating the firm’s history as clean. Ask too whether the coverage extends specifically to media and communications liability rather than only standard general commercial coverage, since the two are not always the same policy, and request the firm’s claims history directly from its insurer rather than relying solely on the seller’s recollection of past incidents.