Two years ago, a group of Republican firm owners started talking about potentially joining forces at the urging of longtime GOP consultant Phil Cox and corporate financier Darrell Lauterbach.
Conversations like these are common amongst practitioners used to collaborating on large campaigns, or who pass along referrals of corporate business to one another. But this time felt different, according to Russ Schriefer, founding partner of GOP media shop Strategic Partners & Media, LLC.
“This seems like the right fit because there’s a lot of connections between the firms,” he told C&E. “Therefore, it was certainly worth going down the road of exploring.”
The end result of that exploration is GP3, an umbrella LLC that joins together 10 Republican public affairs, polling, mail and campaign consulting firms — some of which have overlapping leadership.
They include 50 State, the public affairs shop co-founded by Cox, Schriefer’s Strategic Partners & Media, Red Maverick Media, Public Opinion Strategies, IMGE, GuidePost Strategies, FLS Connect, Bullpen Strategy Group, Ascent Media, and 76 Group.
According to a release, GP3 was “formed” in 2020, but it wasn’t until this month that the combined entity is making a united push. Part of that delay was simply down to working out how to combine so many different firms, some with different corporate structures, who were operating in different industry verticals into a single entity.
The last 24 months have been spent “working through management decisions, financial decisions,” said Schriefer.
Firms often announce formal partnerships that are based, mainly, on a handshake and little else, but this new LLC is meant to be different, according to Schriefer.
“We’ve all been involved with loose arrangements when we make an announcement, when in reality it’s a handshake deal — this is much more than that,” he said. “These firms have come together. We are under the GP3 structure. There’s board meetings, there’s committee meetings. It’s a much more structured environment.”
There could also be a public offering at some stage, although Schriefer declined to speculate on that possibility. But Lauterbach, who serves as GP3’s CEO and president, told the Washington Post last week that company plans to grow through acquisitions. “We’ve got 10 firms now,” Lauterbach said. “We will have probably 16 in fairly short order.”
That could put GP3 on the same trajectory as Stagwell, the marketing and communications conglomerate headed by former Democratic pollster Mark Penn. Since August 2021 the company, which includes mega firms SKDK and Targeted Victory under its banner, has traded on the Nasdaq under the ticker symbol STGW.
On Nov. 10, GP3 announced a partnership with Seidler Equity Partners, which has a minority stake in the LLC. Seidler “provides GP3 with additional resources to continue to align with additional top tier firms and talent in its pursuit to deliver results for its clients,” according to the company.
Schriefer said firms like his are attractive to investors because of their cash flow.
“It is an investment that is actually well worth taking because of the amount of cash flow that all of these businesses throw off individually — and the [combined] potential is even greater,” he said. “They have the ability to make even more money if they can grow.”
Part of what will facilitate that growth is the centralization of the backend processes of the various firms, Schriefer said. GP3 is now in the process of centralizing everything from payroll to bookkeeping to legal to HR.
Still, each shop will be run as an independent business, he said. “You’re own your own, but not alone. We continue to operate our own businesses … but now we’re doing it in a team and group that presents other opportunities.”
More conglomeration of the industry is inevitable, according to Schriefer, as mid-sized firms that have to carry high overhead to service large campaigns and or major advocacy clients looking for one-stop shops will find it hard to compete.
“If you’re in that middle space, where you’re not a big firm and you’re not small enough that the margins can work for you, that becomes a tough space to operate in,” he said.