[q&a] with Charles McCurdy of Apprise Media
q: What were your thoughts coming into last year?
a: We set up Apprise in April 2004. The deal environment a few years ago was pretty bleak. But it was also pretty clear that the economy was improving and the deal volume would be picking up over the next 18 to 24 months. The goal was to focus on niche media kind of broadly actually, to buy good base operations that we could grow organically and operate efficiently. The main target sectors were b-to-b media, consumer enthusiast media and consumer guides. All three were areas where at [Primedia predecessor] K-III we had very good success.
q: Do you categorize yourself as a purely strategic player or a strategic-private equity hybrid?
a: We’re basically a strategic management and development organization within the niche-media sector.
q: What’s it like to compete for deals in an environment with so many private-equity players?
a: I think what differentiates us a little bit from pure private-equity players is a great depth of experience in both general and specific management issues that surround niche-media companies;both consumer and b-to-b;as well as some of the technical stuff involved in evaluating underdeveloped opportunities, and the flipside to that, developed ones that are not so visible.
q: Can you talk a little bit about your strategic team?
a: Apprise Media is basically myself and Michael Behringer. Then we have a large network of talent that can specialize in analyzing contracts or single-copy sales or paper buying, all the things that make a (publishing) company tick. It’s a little bit like having a small, dedicated staff of editors with a lot of freelancers. We have a list of about 30 people we might call.
q: You were one of the finalists in the sale of Primedia Business. Were you disappointed you weren’t able to acquire it, given your history with the company?
a: I was certainly disappointed. There is some very good talent at that company. And there are a variety of underdeveloped opportunities;I agreed with the management. But at the end of the day, we made an offer that we thought was fair, and Wasserstein came in and offered more.
q: How will you balance organic growth/acquisition growth in the future? Have you determined a specific mix of enthusiast vs. b-to-b assets you want to have?
a: A good part of the organic growth is coming from electronic media. Canon’s medical device link is a very successful online offering; it compliments the shows and publications, and is extremely profitable. On the consumer enthusiast side, Beckett.com is a very active hub for the card-collecting industry for the professional collector or hobbyist. It’s a growing, profitable business selling data online. It’s not so different from other publishers. We have to be very selective about what’s exciting for us and what may be a nice business, but not for us.
q: What other types of properties are you looking to buy?
a: Our top concern is enhancing the two platforms we have now. And we have a number of opportunities in the works. The next possibility is a b-to-b company very different from Canon and could be operated distinctly.
q: Are you building a mini-Primedia?
a: Our model really goes back to the original K-III model. When we first set up K-III Communications in 1989, we made a series of acquisitions of good platform businesses in b-to-b, consumer and supplemental and educational sectors, and each one was capitalized discreetly, with localized management and ownership. That worked very well and that’s the Apprise program;a handful of discreet operating companies pursuing their own growth, with localized management. So it’s still a portfolio of companies under common oversight and control, but with a lot more flexibility than Primedia developed as a common holding company under one corporate umbrella.
q: You are backed by Spectrum Equity, and you’ve made four purchases now. Have they upped their stated commitment of $200 million?
a: Their initial commitment was $200 million in equity. At this point we have invested a little over half of that, between Canon and our enthusiast group development. So we still have plenty of equity capital available.
q: Are you looking big or small at this point? Do you have the flexibility to go out and make other big transactions?
a: Generally, the best opportunities tend to be companies that have $30-70 million in revenue and that can operated very intensively and the impact of incremental acquisitions can be quite dramatic. That being said, capital doesn’t seem to be a scarce commodity, if the right larger company came along.
q: What was the most challenging part of 2005, M&A-wise?
a: The hardest thing seemed to be getting that first deal done. We were fortunate to get a very healthy foothold in two different sectors. But there’s anxiety associated with that, the sense of "Are we really going to get something going or not?" Sitting here this time last year, that was a question on our minds. Once that’s set up, there are really all kinds of fun and exciting things we can do, but without that operating base, it’s like driving without a car.
http://www.apprisemedia.com/ | http://www.wasserco.com/ | http://www.spectrumequity.com/