Four Bidders Left in Penton Sale, Should Wrap Up By End of Month
The sale of Penton Media is entering its final stages, with bidders winnowed down to four or possibly five serious players, according to industry sources, who have been extraordinarily circumspect, even by M&A standards.
The process is in its final stages, one source said, with all bidders over $500 million and final bids due by the end of this month.
Word is there are two quasi-strategic players and two pure private-equity firms still in the mix. They include, according to sources: Apprise Media, perhaps the industry’s fastest-growing company, headed by former Primedia founder Charlie McCurdy and backed by Spectrum Equity Partners; Prism Business Media, backed by Wasserstein & Co.; and a big New York City private-equity firm with experience in media businesses but no current b-to-b media holdings.
Industry buzz also suggests that a giant Los Angeles private-equity firm is also a bidder, although there was some confusion over its identity and its name. The word "Oak" was said to be in the name, leading to speculation that the bidder is Oak Tree Capital Management, a Los Angeles-based firm with $31 billion under management and experience with Penton: It is a holder of Penton’s high-yield bonds, having bought below par in 2002-2003 and made a "fortune" in the process.
Concerns Over Price Tag
Interestingly, though, after a period when predictions of a sale price were euphoric;sources said the deal was all but certain to exceed $500 million;in recent days there has been some backing off.
Wasserstein, one source said, is tapped out, having put $150 million into Prism and more into Hanley Wood, and thus would need to find a partner to buy Penton. However, Wasserstein was also said to have been very close to a deal to buy Cygnus Business Media before that company was pulled off the block by owner ABRY Partners. The play for Prism, a source said, would be to save on back office and overhead costs, thus effectively driving down the purchase multiple. Interestingly, Prism independently did its own central-services cost-cutting last week, laying off more than 50 people.
In the end, this source said, Prism would have a "massively diverse company with all these small properties."
A call to Wasserstein vice chairman Anup Bagaria was not returned by press time.
Meanwhile, there was some wariness about a $500 million-plus price tag for Penton, which would amount to an EBITDA multiple of 10-times or more. "To the extent that there are quasi-strategics (Apprise and Prism) in the running, the question is whether buying Penton at a very full valuation is a positive from an investment standpoint," said one executive familiar with the process "That’s a very complicated question. There is some rationale for Canon (an Apprise company), but is that enough to enhance the exit opportunities for either of those businesses?
"They’re trying to push the process over $500 million," the executive said, "and that’s 10.5-times or 11-times cashflow, and that’s a lot. This may turn out to be another Advanstar thing or Cygnus thing." (Both were failed auctions.) "On the other hand someone may step up."
The discussion of the high multiple and the complexity of a future exit might be beside the point, another source said. "If you can realize $10 million in savings, then the effective multiple comes down significantly. The question is how much of that additional value you can realize and share with the seller," the source, an executive familiar with both b-to-b publishing and private equity, said. "There is always going to be liquidity if the business performs."