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 sales—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. “Typically, a magazine publisher wants a third-party who is knowledgeable about the magazine industry to provide recommendations for strategies necessary when a recession occurs,” D+P managing partner Reed Phillips said. “We added this service because a number of clients have been requesting it.”
Berkery Noyes said that its services will include developing business models to “reflect the realities of the current economic and financial marketplace,” as well as deal with balance sheets that are “over-leveraged by today’s standards.”
I’ve always thought the M&A environment is a direct reflection on the health of the industry. If people are buying, they’re bullish. If people are selling, they’ve done well and want to convert equity to wealth.
Neither of those motivations is present right now.
These M&A firms—all of them, not just D+P and Berkery, Noyes—have some of the most talented and experienced people in the business—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: “If you’re going out of business, they’ll help you get there faster.”