BtoB Media Business - April 2010 - (Page 18)

M&A Signs of renewed life Jordan, Edmiston report shows dealmaking increased year-over-year in the first quarter M&A BY SEAN CALLAHAN ANALYST INSIGHT Michael Marchesano Managing director, Jordan, Edmiston Group The mergers and acquisitions market is trying hard to recover. M&A activity in media, information, marketing services and technology rebounded gingerly in the first quarter, according to tabulations released recently by media investment bank Jordan, Edmiston Group. The number of deals increased 70% to 234 in the first quarter compared with the yearearlier period, and aggregate deal value leaped by a factor of five to $8.2 billion. Sequentially, however, aggregate deal value fell 43% in the first quarter compared with the fourth quarter of 2009, even as deal volume rose 58%. “M&A is still going through a very hard time, and the market has not quite bounced back yet,” Scott Peters, co-president of Jordan, Edmiston, said in an interview. The rise in deal volume and value was driven by six of the 10 sectors that Jordan, Edmiston tracks: b-to-b online media, b-to-c online media, b-to-b media, database and information services, marketing and interactive services, and mobile media and technology. In b-to-b online media, M&A activity exploded in the first quarter compared with the year-earlier period. The number of transactions jumped to 36 (up from three) and the total value ballooned to $407 million (up from $16 million). M&A activity also grew in the traditional b-to-b media sector, with the number of transactions leaping to 14 in the first quarter of this year from three in the same period of 2009. Similarly, deal value increased markedly to $71 million, from $5 million. Driving much of this transaction volume were business information giants Nielsen Co. and Reed Elsevier, both of which are shedding most of their trade publishing titles. “What’s going on in the market is it’s the end of an era,” said Ed Fitzelle, managing director of Whitestone Communications. “You have Nielsen and Reed both divesting b-to-b publications in deals. Clearly, they’re getting out of the market.” Key deals in the quarter included Sandow Media’s purchase of Interior Design and other titles from Reed Elsevier’s Reed Business Information US and Northstar Travel Media’s acquisition of Nielsen Business Media’s travel group. A good portion of the deals in the b-to-b media segment were backed by private equity funding. For instance, Sandow Media is backed by Veronis Suhler Stevenson, and Northstar Travel Media is backed by Boston Ventures. Overall, however, private equity—with credit markets still not entirely thawed—has remained on the sidelines. Of the 234 transactions announced in the first quarter, just 32 (14%) were led by private equity firms or by private equity-backed companies. Separately, a report issued by investment bank Petsky Prunier also found that M&A activity in the marketing, information, and digital media industries is mounting a tentative comeback. During the first quarter, the investment bank tracked 201 transactions worth a combined $8.8 billion. Of these deals, 123 (valued at an aggregate of $6.9 billion) were made by strategic buyers, which accounted for 61% of deal flow and 79% of the total value. Private equity and venture investors accounted for 71 transactions valued at a combined $1 billion. A roundup of recent mergers and acquisitions M&A ACTION Date Property Description 3/10 Library Journal, B-to-b media brands School Library Journal 3/10 ebizQ.net Web site focused on business process management 3/10 Several trade Properties include Convemagazines nience Store News, Progressive Grocer and Gourmet Retailer Source: Jordan, Edmiston Group Transaction Database, 2010 Seller Buyer Reed Business Media Source Information US (Riverside Co.) ebizQ.net Nielsen Business Media TechTarget Food Media Group (Stagnito) ichael Marchesano is managing director of media investment bank Jordan, Edmiston Group. Prior to joining Jordan, Edmiston in 2007, he was exec VP-chief transformation officer at Nielsen Co. Media Business: Do you see the recent surge in media M&A continuing this year? Michael Marchesano: It will continue, and it’ll be driven by 18 months of seller buildup, the expected increase in capital gains taxes in January 2011 that will pull sellers forward in 2010 and many strategic buyers having healthy balance sheets and wanting to accelerate growth via acquisitions. Private equity companies are also becoming more active as buyers because they need to deploy capital, which has built up from their inactivity in the last year and a half. MB: How do you see valuations for media companies shaping up? Marchesano: Multiples for online media, interactive marketing services and database/subscription-driven companies have remained relatively strong, even through the economic downturn. Overall, valuation multiples for media and information companies are rebounding from lows reached in the second half of 2008. MB: How are data and targeting changing social media monetization? Marchesano: The utilization of data, analytics and targeting to improve ad performance online will continue to rise through 2010 and beyond, as the interactive marketplace shifts from selling “sites” to selling “audience.” Companies that provide scale in these areas, can deliver double-digit revenue growth and show a clear path to profitability will see attractive multiples and a deep pool —Matthew Schwartz of buyers. No letup in sight for M&A surge M 18 | Media Business | April 2010 | mediabusinessonline.com http://www.ebizQ.net http://www.ebizQ.net http://www.mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - April 2010

BtoB Media Business - April 2010
Table of Contents
‘IEEE Spectrum’ Takes Home Another Grand Neal
Publishers Strive to Increase Lead-Gen Revenue
Five Technologies You Should Consider Using
Sales & Marketing
M&A
Audience Development
Events
People
Benchmarks
Mission Statement Can Miss the Real Reality

BtoB Media Business - April 2010

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