In Crisis, M&A Firms to the Rescue
Brokers shift focus from buying and selling to restructuring.
The deal climate is terrible. FOLIO: has tracked fewer than a dozen transactions in the last couple of months, and most of them were very small.
Worse, of that small number of deals, at least three were distress salesâ€”that is, where the bank essentially takes over the business.
No wonder the deal brokerages are looking to repurpose their expertise. Berkery Noyes and DeSilva + Phillips, two of the four major M&A firms serving this market (the Jordan, Edmiston Group and AdMedia Partners being the other two) have added restructuring practices recently.
Both were frank. â€śTypically, a magazine publisher wants a third-party who is knowledgeable about the magazine industry to provide recommendations for strategies necessary when a recession occurs,â€ť D+P managing partner Reed Phillips said. â€śWe added this service because a number of clients have been requesting it.â€ť
Berkery Noyes said that its services will include developing business models to â€śreflect the realities of the current economic and financial marketplace,â€ť as well as deal with balance sheets that are â€śover-leveraged by todayâ€™s standards.â€ť
Iâ€™ve always thought the M&A environment is a direct reflection on the health of the industry. If people are buying, theyâ€™re bullish. If people are selling, theyâ€™ve done well and want to convert equity to wealth.
Neither of those motivations is present right now.
These M&A firmsâ€”all of them, not just D+P and Berkery, Noyesâ€”have some of the most talented and experienced people in the businessâ€”people smart about operating magazine companies and finances and org structures.
Which leads to the kind of gallows humor I heard after one of the announcements of these restructuring practices. I heard one executive say: â€śIf youâ€™re going out of business, theyâ€™ll help you get there faster.â€ťÂ
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