Report Finds Increase in M&A Deals in B2B, Consumer Media
Despite increase in transactions, deal values have decreased since last year.
Given the high level of anxiety about the future of journalism and magazine media, it should come as no surprise that mergers and acquisitions are much more frequent this year compared to last year. In fact, data from AdMedia Partners' annual survey of media executives last year suggested that M&A activity would increase.
Now, a report from JEGI, which looked at merger and acquisition activity across media, information, marketing, software, and tech-enabled services in the first half of 2016, reaffirms this prediction to a certain degree. The prediction holds true in the B2B media and technology, consumer media and technology, and marketing services and technology industries.
In fact, upon first glance, the M&A activity among B2B companies looks overwhelmingly positive, as the sector saw exponential growth in deal value in the first half of 2016. However, the report quickly points out this growth is entirely due to Microsoft’s $29.4 billion acquisition of LinkedIn in June.
Disregarding that deal, the M&A deal values in the sector declined 75 percent compared to the same time period last year.
But in holding with last year’s prediction, there were 55 deals in H1 2016, an increase of 14 percent compared to H1 2015. Among the most notable acquisitions are Bankrate’s acquisition of NextAdvisor for $210 million, Wasserstein’s acquisition of Northstar Travel Group from Wicks Group, and Wicks Group’s acquisition of Bisnow, reportedly for $50 million.
In the same vein, deal volume increased in the consumer media and technology sector, but the value of said deals dropped significantly. According to the report, there were 107 transactions in the first half of 2016, compared to 100 in 2015, but these deals were only worth $3.9 billion. In comparison, the 100 transactions in 2015 were worth a grand total of $9.1 billion (though this was largely driven by Verizon’s acquisition of AOL for $4.8 billion).
Among these transactions was Hearst Ventures and Verizon’s joint acquisition of Complex Media, for an estimated $250 million, in a bid to reach more millennials and invest in video.
Despite the declining value in M&A deals in the aforementioned sectors, it is notable that the marketing services and technology industry has seen a large number of acquisitions and a boost in value. So far in 2016, there have been 333 transactions worth $13.3 billion in value, in comparison to 278 deals worth $12.7 billion in the same time period last year.
Only eight of the transactions were content marketing deals, worth a total of $148 million. As media companies place increasing importance on content marketing, however, one can reasonably guess that more deals in this specific area will take place in the coming years. The same can be said for social media marketing. Sixteen M&A deals were made in H1 2016, worth $107 million.
As more media companies also turn to live events, it is interesting to note that M&A activity in the exhibitions and conferences sector declined in both deal volume and value. The number of deals decreased by 24 percent, to 32, while their value dropped six percent to $2.3 billion. In comparison, the first half of 2015 saw 42 deals worth $2.5 billion. One of the bigger deals of H1 2016 was the sale of Business Journals, Inc. to UBM for $69 million, part of the latter’s “events first” business strategy.