SIIA MEDIA: M&A activity should pick up, experts predict, as economy settles down
A just-released survey of 150 U.S.-based investment bankers, M&A attorneys, private equity investors, and CFOs by Grant Thornton LLP found that 99% of respondents expect an uptick in deal volume during the next six months. One reason is PE firms are becoming more comfortable in this economic climate. The survey also indicated media as one of the top industries for transaction activity.
By Ronn Levine
A frenetic last couple of years saw Endeavor Business Media make numerous acquisitions, including Putman Media, GovExec close on at least 15 acquisitions, and media giant Informa acquire Industry Dive for a reported $525 million enterprise value—nearly five times the company’s annual revenue.
It was hard to go through a week without a significant B2B media acquisition. Then came 2023.
Adweek recently reported that “the number of merger and acquisition deals in the media sector this year [is at] its lowest level since 2020… But a recent swell of positive indicators—including, in time for the fourth quarter, a general market upswing and a resurgence in ad demand—suggests that activity in the space could resume by the turn of the year…”
John McGovern, CEO and owner of Grimes, McGovern & Associates, sees the horizon a little differently.
“The only slowdown we have really seen is with some smaller buyers who are exposed more (than large strategics or PE) to higher interest rates and generally tighter capital environment given their size,” McGovern said in an email. “There continues to be lots of innovation in the conference business in terms of new players going after the ever-expanding topics in tech, energy and health care.
“We all know that the list of large for-profit independent tradeshows likely to come on the market is a shorter list than we would like. In general the number of PE firms coming into the relatively small B2B information and events industry… since 2019 is 20+ firms—which is significant… That capital is still out there looking for a home.”
In June we did see GovExec acquire The Advanced Technology Academic Research Center (ATARC) and WHTH Media acquire Aging Media Network. And last week it was reported that Future plc hired investment bankers JEGI CLARITY to divest its sprawling portfolio of B2B brands, highlighted by SmartBrief.
This has provided a slight buzz in the industry that it might be time to buckle up again.
“Regarding the overall market, I think uncertainty around the macro environment and rising interest rates cooled the market in 2023,” Sean Griffey, CEO of Industry Dive, emailed to us yesterday. “(Rising rates particularly impact the PE buyers as they generally use debt to finance their deals. As rates go up, their financing costs go up which impacts their ability to be aggressive.) I suspect that we’re reaching a new equilibrium and that M&A activity will pick up again in the coming months.”
Eric Burgess, transaction advisory services partner for Grant Thornton, said people are getting more comfortable with buying in the current climate. “You have inflation plateauing, and if you think back to six months ago, many buyers were waiting to see what was going to happen,” said Burgess. “I think we’re finally getting back to normal.”
According to Burgess, PE leaders have increased the number of deals they’re closing, but the transactions are smaller and include many portfolio company add-ons that PE firms are bundling in hopes of driving higher valuations in the future.
SmartBrief, purchased by Future only four years ago for a reported price between $45 and $65 million, may be the straw that stirs their big selloff. At the time, CEO Zillah Byng-Thorne said, “The acquisition of SmartBrief will substantially boost our presence and market position in the B2B sector and enhance our technology capabilities.” New CEO Jon Steinberg seems to want to head in a new direction.
Mark Holdreith, co-founder and partner of Media Advisory Partners, wrote in an email to us: “The most attractive asset is likely SmartBrief. The newsletter model makes them less dependent on the platforms for traffic. That said, they may not control their distribution as much as other B2B newsletter providers, as they are dependent on their partnerships with associations and others for their member lists. The revenue share with partners may hurt their margins. I would expect PE to be most interested.”
Added Chris Ferrell, CEO of Endeavor Business Media: “This is one of the first of a number of larger B2B media and event businesses that are coming to market in the next few months. It will be interesting to see if [Future’s B2B assets] move to separate buyers or if a larger PE firm decides to build a significant company by rolling a number of them together into one entity.”
McGovern added something that has to be a part of every equation today: artificial intelligence.
“AI has everyone on their toes, but it kind of reminds me of the offshoring phase that info services companies went through years ago to minimize the expense of repetitive tasks,” he said. “Media companies will use AI in the same way.”
MEDIA CONTACT/INTERVIEWS: John McGovern, CEO/Owner (Grimes, McGovern & Associates) at [email protected]
Free Business Assessment
Find out what your business is worth
We offer an initial complimentary assessment for owners of media properties. Just click on the property type and complete the confidential form to get started. We’ll contact you within 24 hours to review.
Businesses for Sale
View our lists of publishing, global events, technology, digital media, and information services business currently for sale.
Free Publishing or Subscription, Events, Technology & Digital Media News
Stay abreast of the latest trends in the M&A industry. Read interesting case studies. Track deals throughout the country. Pick up hints from experts and much more.