First Quarter M&A Activity Strong Off the Line
Last year was already a banner year, almost doubling 2004 deal value levels and, according to JEGI, 2006 will likely continue the pace. "All indications are that it’s heading in that direction," says Adam Gross, vice president marketing and communications at JEGI. "The 35 percent value increase, our pipeline of deal activity, what we see in the general economy and the media industry are all heading in the right direction. This is at least through 2006 and very potentially into 2007 and beyond. There’s nothing extraordinarily negative in sight."
While overall deal activity is strong, B-to-b and consumer magazines, conferences, and online media have seen mixed results over Q1 2005 levels. The number of b-to-b deals fell 43 percent, value is down 67 percent; consumer deals are up 27 percent with a value decline of 95 percent; conferences are up 27 percent with value up 70 percent; and online media is already up 54 percent but with a 13 percent decrease in value.
Private equity firms will likely remain highly competitive with strategics this year due to their high liquidity and generous bank financing (see chart below for 2005 private equity action).
Private equity firms were buyers on 120 deals in the media and information industries in 2005, or 24 percent of the total deals completed for the year, representing a 50 percent increase over 2004. Activity for the first quarter 2006 indicates private equity will likely be representing a third to half of M&A deals for the year.