Senior executives for both content- (traditional media and digital) and services- (marketing services, digital marketing and marketing technology) driven companies expect a significant surge in deals next year, according to the 2011 "Merger and Acquisition Prospects for Media, Marketing Services and Marketing Technology Firms" report from AdMedia Partners.

Interest from both strategic and financial buyers is expected to increase, with executives at content companies anticipating activity from strategic buyers to be up 78 percent, while activity from financial buyers will be up 63 percent. Forty percent of respondents say they will seek an acquisition target, while 36 percent are contemplating the sale of their company.

While 88 percent of respondents said buyers should act now, just 51 percent advised sellers to do the same, indicating they expect further increases in valuations going forward.

The survey says that lines continue to blur between marketing services, media and content and technology, with 48 percent of service firms say they see new competition from content companies, while 40 percent of media companies express a desire to develop or acquire marketing services. Seventy-eight percent of respondents at content companies (strategic buyers) say they are interested in expanding their custom content stable, with 63 percent are looking for products based on user-generated content. More than half of content companies say they’re looking for acquisitions around mobile, blogs and online video.

Analytics/optimization services are the most desired acquisitions among financial buyers (77 percent), followed by information/database publishing. Just 46 percent of financial buyers said they’d be interested in b-to-b media, while even fewer (38 percent) will do deals around consumer media. (The feelings may be mutual among traditional media companies after so many publishers have been forced to restructure or sell after failing to meet covenants established in the go-go days of 2003-2008–just 33 percent of content companies said they’re looking for investment funding).

EBITDA Valuations On the Rise

EBITDA (earnings before interest, depreciation and amortization) valuations will be up in traditional media categories but actually take a step back for two of the hottest categories, online media and information/database publishing, according to the AdMedia survey.

Respondents say they consider 6x to be a reasonable multiple to pay for b-to-b and consumer publishers, up from 4x in 2010 but still below the 7-10x multiples the categories demanded in 2005-2008. EBITDA multiples for exhibitions, tradeshows and conferences will be 5x, up from 4x in 2010 (but again, down from the 7-10x of 2005 to 2008).

Online media still commands the highest EBITDA valuations at 7.5x according to the survey, but that’s down from 8x in 2010 and 9-10x in 2009 (however, 26 percent of respondents say they think multiples of 9x or greater are reasonable for online media).

Meanwhile, respondents say 6x is a reasonable multiple for marketing services, and they’d pay 7x for social marketing. Valuations for information and database publishing were estimated at 6x, down from 7x in 2010 and 8-9x in 2009.

Expectations for "Reasonable Multiples" in 2011
Business-to-Business Media: 6x
Consumer Media: 6x
Online Media: 7.5x
Exhibitions/Trade Shows: 5x
Information/Data Publishing: 6x
Custom Content: 6x
Marketing Services: 6x
Social Marketing: 7x

Source: AdMedia 2011 Market Survey