BtoB Media Business - September 2012 - (Page 13)

M&A M&A activity picks up Reports from media investment banks show first-half increase in deal volume, value BY MATTHEW SCHWARTZ ANALYST INSIGHT Chuck Richard VP-lead analyst, Outsell Inc. S Richard Mead, managing director at Joreparate reports released by investment dan, Edmiston, said having diverse revenue banks Berkery, Noyes & Co. and Jor- streams played an important role in the recent dan, Edmiston Group show a steady sale of Northstar Travel Media to a private equptick in media mergers and acquisition ac- uity fund of the Wicks Group of Cos. for an tivity in the first half of this year, with more undisclosed price. Jordan, Edmiston repredeals on the horizon. sented Northstar in the transaction. “We have a very positive outlook going “There was a lot of interest for Northstar, forward,” said Tom O’Connor, managing di- both from strategic [companies] and financial rector at Berkery Noyes. “I think you’ll see sponsors,” Mead said. “What they were very more deals, but smaller deals. You have some keen on was a single sector-focused business b-to-b publishers in the $20 million range who [and] an array of revenue streams, ranging may want to sell their business. from market-leading magazines They’ve done very well, but it and events, online [media] and may be time to sell; the market business intelligence.” has moved.” Jordan, Edmiston’s M&A reBerkery Noyes’ report foport focused on deal flow in the cused on M&A activity in the media, information, marketing media and marketing industries. services and technology sectors. The number of transactions in Tom O’Connor, managing The number of transactions in director, Berkery Noyes. the first six months of the year the first six months of the year rose 6% from the year-earlier period to 834, increased 52% from the year-earlier period to while the aggregate deal value surged 27% to 652, while the aggregate deal value jumped $31.5 billion, according to the report. 49% to $31.7 billion, the report said. The median revenue multiple fell to 1.2x in The b-to-b media sector remained relatively the first half from 1.8x in the year-earlier peri- quiet. Jordan Edmiston tracked 14 first-half od, and the median EBITDA (earnings before deals, compared with eight transactions in the interest, taxes, depreciation and amortization) first half of 2011. Aggregate deal value infell to 7.8x from 10.0x. creased 266% to $82 million. (The Northstar “If it’s about 100% price, the [media] transaction closed in July and is not included in property is going to have a challenge in the the report.) marketplace,” O’Connor said. “But if there is Mead said that on the heels of the Northstar a balance of revenue steams, some recurring deal, “we are seeing a number of traditional revenue and more subscription-type prod- b-to-b media companies inquiring about comucts in the mix, it makes it much more attrac- ing to market.” He did not name any of those tive to buyers.” companies. “I think you’ll see more deals, but smaller deals.” A roundup of recent mergers and acquisitions M&A ACTION Date 7/12 Property Highline Description Provider of data for commercial aviation industry Seller Highline Buyer Penton Media 7/12 Northstar Travel Media Information company BV Investment Wicks Group of serving travel and meet- Partners Cos. ings industries Vornado Realty Informa Trust 7/12 MMPI Canada Canadian producer of trade shows and conferences Source: Jordan, Edmiston Group Transaction Database, 2012 huck Richard is VP-lead analyst at media research company Outsell Inc. Media Business: What do you think the level of media M&A activity will be for the remainder of the year? Chuck Richard: We’re in an upswing, and I particularly describe the period we’re in as a period of “precision M&A.” In the past, you could argue that there was portfoliobuilding or financial M&A, where you just decided based on some earnings numbers and some revenue trends, and that was good enough. Now, buyers are being very selective and following very well-defined filters for the types of companies that they want to buy. I see people buying by very precise geographies and for very precise data or services needs. The large multivertical portfolio companies will continue to unwind. We had Nielsen, we had RBI (Reed Business Information); now, we have McGraw-Hill. People don’t want dispersed volume; they want precise fits with narrow specialties. MB: Do strategic b-to-b media companies need to increase their acquisitions of digital media properties? Richard: Let’s expand that to services, data, software and geographically specific (acquisitions). The forerunners of the geographical expansion have been the events companies’ moves into emerging markets, like Reed Exhibitions and UBM (United Business Media), and that’s precision. This isn’t just companies buying websites; it’s companies buying properties to acquire very specific —M.S. skills, talents and tools. New watchword is ‘precision’ C M&A mediabusinessonline.com | September 2012 | Media Business | 13 http://www.mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - September 2012

BtoB Media Business - September 2012
Table of Contents
Upfront
Cover Story
Budgeting for 2013
Sales & Marketing
M&A
Production
People
Benchmarks
Endnote

BtoB Media Business - September 2012