Curtco Deal: When is a 12X Multiple Not Enough?
CurtCo Media Labs, the owner of Robb Report and more than a dozen other luxury magazines clustered around that brand, announced in April that it had been receiving so much buyer interest that it was putting itself on the block.
Owner Bill Curtis confirmed in a report published in the New York Times that the auction has been canceled.
CurtCo had been seeking $500 million, according to initial reports last spring, but with revenue of roughly $100 million and EBITDA of a reported $20 million, the price was extremely rich.
The cancellation comes after months of silence regarding this auction in M&A circles, even during one of the hottest mergers and acquisitions climates in magazine-industry history. Whether the silence was reflective of inactivity is uncertain, but most observers suggested that indeed, there was little serious interest in CurtCo.
“Meredith, Rodale, they probably all looked at it,” said one M&A source. “But I don’t see them falling all over themselves to buy more magazines. It’s an unfortunate truism of our business, but that’s the reality.
“Basically, they are a $100 million company, looking for $300 million to $500 million. That’s a problem,” the source added. “Hubris is certainly a good description.”
Curtis, reached late Wednesday, said he had 12 solid offers, mostly from private-equity firms. However, he said he had hoped bids would rise higher than 12-times EBITDA. “It seems the market doesn’t currently reward for consistently high levels of growth,” he said. “We had five straight years of 20 percent-plus growth. Having people offer us a multiple of 12-times was not exciting to us. At those multiples, I’m a buyer in this market.”
A second observer said price expectations were the sole challenge. “They would have taken anything from $350 million to $500 million. But it was totally unrealistic,” said this second observer, a potential buyer.
CurtCo acquired Worth Magazine in 2003 and Art & Antiques in April from Trans World Publishing.