BtoB Media Business - March 2008 - (Page 21)

M&A Questex gets ‘Fierce’ Company aims to pump up its digital presence by acquiring FierceMarkets BY MATTHEW SCHWARTZ ANALYST INSIGHT Baran Rosen President, Whitestone Communications W ith its recent acquisition of b-to-b online media company FierceMarkets, Questex Media Group now has the opportunity to apply an e-mail newsletter model to its wealth of vertical properties. Questex, which has more than 100 print and digital media publications and 45 events, covers several industries, including beauty, hospitality, technology and travel. Among its properties are: American Salon, Computerworld Hong Kong, Hotel & Motel Management and Travel Agent. FierceMarkets (www.fiercemarkets.com), which debuted in 2001, targets b-to-b executives through its portfolio of e-mail newsletters, Web sites, webinars and live events. It currently produces 19 online publications focusing on the telecommunications, life sciences, health care, IT and finance industries. E-mail products include FierceBiotech, FierceCIO and FierceHealthcare. It has a total of 560,000 e-mail subscribers. FierceMarkets will operate as a subsidiary of Questex. Jeff Giesea, founder and president of FierceMarkets, and his staff will continue to manage it from its headquarters in Washington, D.C. “There’s a good balance of some crossover properties, but there are lots of industries in which we don’t have a presence,” Giesea said. FierceMarkets’ business model—the distribution of distilled information via e-mail to controlled-circulation audiences—has resonated with b-to-b advertisers. Its Web audience has more than doubled in each of the last two years, and it has had more than 40% compound annual revenue growth in the last five years. Kerry Gumas, president-CEO of Questex Media, said the company will initially extend FierceMarkets’ telecom products into Asian markets “where we have a strong telecom base but not a strong suite of digital products.” Several b-to-b media companies were attracted to FierceMarkets, according to Richard Mead, a managing director at media investment bank Jordan, Edmiston Group, which represented FierceMarkets in the transaction. Financial terms of the deal, which was completed in January, were not disclosed. Mead said the price was “a healthy multiple,” but he declined to be more specific. Gumas said the acquisition plays into larger trends in the delivery of business information. “Advertisers prefer lead generation and measurable media, and are planning to increase investment in all forms of digital media,” he said. Questex, which Gumas formed in 2005 with the buyout of various assets of Advanstar Communications, has made a string of acquisitions in the last year. These include Oxford Publishing, which produces The Show, the largest beverage event in the western hemisphere, and Five Star Alliance, an online luxury hotel booking service. “Kerry is steadily shedding the image of ‘Son of Advanstar’ and seems determined to do it,” said Chuck Richard, VP-lead analyst of media research company Outsell. “He’s adopting the kind of transactional, subscription and other user-paid business models that b-to-b publishers need to add to the mix.” Slight hiccup for b-to-b deals M&A M&A ACTION A roundup of recent mergers and acquisitions Date Property Description 2/08 Vision Events Provider of specialized IT events 2/08 HCPro Provider of information, education and consulting products and services related to health care regulation and compliance 1/08 Randall-Reilly Integrated b-to-b media comPublishing pany focused on the trucking and construction industries Source: Jordan, Edmiston Group Transaction Database, 2008 Seller Gartner Inc. HCPro Buyer CMP Halyard Capital RandallInvestcorp Reilly Bank Publishing The slowdown in the economy is causing a “minor chill” in b-to-b media deals, said Baran Rosen, president of media investment bank Whitestone Communications. But the lull—a result of the housing crunch that is at the root of the current economic slowdown—is likely to be tempoTIPS rary, he said. Do: Buyers may “By the second want to be a lithalf of the year, I’m tle tougher duroptimistic there’ll be ing negotiations because sellers more freewheeling could be facing and dealing as downward reopposed to the con- sults this year stricted environment and may be anxious to get a we’re now in,” he deal done. said. Don’t: Sellers B-to-b media should not be too quick to sell. M&A activity will If they perceive pick up in the seca slowdown in ond half, he said, as their business, a result of recent they might want to wait at cuts in interest rates by the Federal least until the second half of Reserve Board and the year to do a the approval of the sale. federal stimulus package, which is designed to pump more money into the economy. Private equity players, whose activities have been somewhat tempered by tougher terms imposed by banks, will continue to be fairly active this year, Rosen said, pointing to Halyard Capital’s recent acquisition of health care information provider HCPro Holdings. “That company was on the block for a while,” he said. Rosen said strategic b-to-b media companies have adequate financial resources to cut small and midlevel deals. “They can do deals less than $100 million without even thinking about bank financing,” he said. —Matthew Schwartz mediabusinessonline.com | March 2008 | Media Business | 21 http://www.fiercemarkets.com http://mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - March 2008

BtoB Media Business - March 2008
Contents
Is Reed's Move a Game Changer?
Upfront: ABM honors McCracken, Thompson and Verdon
Cover Story: Business Data Sales Provide Steady Revenue
Audience Development
Special Report: Circulation Executives gain a Higher Profile
Sales & Marketing
M&A
Online
Video Goes Mainstream
Events
Production
People
Benchmarks
Publisher Rankings
Endnote: Information Helps Build Client Relationships

BtoB Media Business - March 2008