Venture Capitalist Has a Plan to Take Lobbying Shops Public
Kenneth P. Ducey Jr. is the mystery man of K Street.
Downtown D.C. has been buzzing for weeks about a venture capitalist who's been secretly trying to buy a bunch of lobbying shops, tie them together and take them public. Well, the gossip is true, and the 41-year-old, Connecticut-based Ducey is that man.
I don't know whether he can pull it off; he won't identify his financial backer and the history of such ventures is abysmal. But investors have been digging deep lately in the belief that so much money can be won in Washington that lobbying companies are no-lose propositions.
"They're excellent businesses," the gregarious Ducey effused in a telephone interview. "At least the lobbying firms I've been talking to have been growing substantially over the past five to 10 years, are earning money and have a very loyal clientele."
In other words, manipulating government has developed into a reliably high-margin -- and thus high-rate-of-success -- enterprise.
That fact may contain the seeds of K Street's own decline, of course. With scandals involving lobbyists and lawmakers ravaging Capitol Hill and dragging down public faith in politicians, it probably won't be too long before new restrictions are placed on lobbying and campaign donations. That, in turn, might dent lobbying's profitability and effectiveness at least for a while.
In the meantime, the market for lobbying properties is hot. Ducey's entreaties come during a mini-wave of acquisitions. Last week, Financial Dynamics, an international public relations company, bought the District's Dittus Communications, an expert in PR for lobbying campaigns. And in September, Ogilvy Public Relations Worldwide, a unit of Britain-based WPP Group, bought the Federalist Group, a Republican lobbying firm.
Other permutations of partnership have also proliferated. Two years ago, Lake Capital Partners, a Chicago-based investment firm, committed to spend millions of dollars to expand Dutko Worldwide, a diversified lobbying firm. There's also talk that people other than Ducey are eager to purchase lobbying firms with an eye toward offering them to the stock market.
Gerald S.J. Cassidy was the first person to try to take a lobbying company public when, in 1998, he offered shares in the firm that bears his name. He proposed to become, in effect, the King of K with a stock sale that would have raised him $40 million.
It never happened. The IPO foundered as the market weakened and people expressed doubts that lobbying -- the quintessential service business without tangible assets -- was steady enough to gain value over time. Cassidy & Associates was sold the next year to Interpublic Group of Companies Inc. instead -- becoming another in a long series of lobbying shops that have been bought by multinational advertising giants.
Ducey is betting that times have changed and that a free-standing lobbying company can thrive in the stock market. He said modern lobbying isn't so much back-scratching as "best practices" that can be learned and passed along in a professional manner. He is also convinced that lobbying has become such an accepted part of Washington that the danger of it falling out of favor is small.
What lobbyists need but don't have, he said, is access to capital. Not the nation's capital, but capital in the sense of financing, primarily for expansion. And Ducey, as a longtime financier in the New York region, said he has a way to tap into it.