Start-up companies often offer equity in return for PR services rendered. This quid pro quo could work out well for both sides – the emerging company gets access to the skills of a strong agency while preserving its precious cash, and the agency can get a big payoff in the event of a successful exit – one which far exceeds the fees it would have charged.
But several agencies got badly burned in the downturn as start-ups failed and the paper became worthless. After all, PR firms have cashflow management issues of their own. Now there’s a new wave of start-ups offering equity in return of PR services. Should they accept? Perhaps just for a bonus element? Perhaps it’s good to be aligned with your clients financially? Perhaps it shows a level of commitment to have skin in the game? Or perhaps, PR firms should stick to making their profits from what they do best, and leave the speculation to others?
So, should PR firms take equity in their clients?
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