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Overall Media M&A Up 9 Percent in 2011

Marketing and interactive services drive growth with 32 percent of total value.



Bill Mickey By Bill Mickey
01/03/2012

 

The media M&A market saw its third year in a row of growth, closing out 2011 with a 9 percent increase in total value over 2010, according to a year-end report by The Jordan, Edmiston Group.

There were 896 deals done, says the investment bank, 15 more than 2010 and more even than in the blockbuster year of 2007. Total value, however, still hasn't come close to that year. In 2011, the deals represented $47 billion in value, up $4 billion from 2010, whereas 2007 saw $104 billion in deals done.

A key trend in 2011 was marketing and interactive services, which represented 32 percent of total deal value and accounted for 17 of the 32 biggest deals, and a third of total transaction volume.

And while expectations remain high for private equity, strategic buyers were decidedly more acquisitive. Out of the 32 largest deals (more than $400 million), 24 were done by strategics.

Sector by sector—JEGI tracks 10—exhibitions and conferences recorded a 249 percent increase in deal value over 2010. There were 32 deals totaling $451 million, with Providence Equity Partners' acquisition of GLM from Daily Mail & General Trust accounting for $180 million of that. JEGI points out that the fourth quarter marked quite a bit of activity from strategic buyers, with UBM, Bonnier, Diversified Business Communications, Pennwell and Reed Elsevier making deals.

Consumer magazines also had a busy year with 32 transactions valued at $3.2 billion, a huge jump over 2010's $214 million deal value.

B-to-b media was comparatively quiet, recording only 14 deals and $50 million in value—a 62 percent and 91 percent decline from 2010, respectively. B-to-b online media and tech, however, spiked appreciatively in value. The year's 63 deals were 2 more than 2010, but value jumped 132 percent to almost $6 billion.

As mentioned, the marketing and interactive services sector again accounted for the highest volume at 291 transactions and a $15 billion total value.

Interestingly, mobile media and tech declined slightly in volume with 72 deals done in 2011 versus 77 in 2010, but value jumped 37 percent to almost $2 billion.

An Optimistic Outlook for 2012

While JEGI expects deal activity to be "vigorous" this year, AdMedia Partners' 18th annual "Merger and Acquisition Prospects for Media and Marketing Services and Technology Firms" survey concludes that the activity from 2011 will indeed spill into 2012.

According to the survey, two-thirds of respondents said they were approached by a strategic and/or financial buyer in 2011, and 59 percent of respondents expect to look for an acquisition in 2012, which is up from 40 percent from last year's survey.

Companies are beginning to think they're ready to sell as well, with 48 percent of respondents indicating they're thinking of selling in 2012, much more than the 36 percent who said as much last year.

Funding and Multiples

The strategic buyers will continue to dominate the deals, with three out of four respondents saying strategics will be up in 2012, as they were in 2011. Capital is ready to be put to work, with 55 percent of respondents saying they'll fund acquisitions using cash reserves. Private equity will still be a player, however. Forty-three percent of respondents say they plan to raise outside equity. Twenty-seven percent say they plan to use debt financing.

EBITDA multiples are generally in the 6x to 8x range, depending on the sector. Marketing services, which as been a hot sector, will achieve 6x-8x multiples, say 47 percent of respondents. Sixty percent of respondents say digital media will command 8x or greater multiples. Mobile and social marketing are each expected to fetch 7x multiples, according to the majority of respondents.

Bill Mickey By Bill Mickey
01/03/2012







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