Study: No Relief in Sight for Battered M&A Market

Media and Marketing Space Sees Number of Deals, Value Plummet in '08

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NEW YORK ( -- A worsening business environment prompted a staggering drop last quarter in mergers and acquisitions for the marketing, advertising and digital media industries, data released today shows.

M&A consulting firm Petsky Prunier tracked a total of 140 transactions in the fourth quarter of 2008 -- a 42% decrease in volume compared with year-prior period. The total dollar value of the deals fell even more sharply, down 79% from the fourth quarter of 2007 to $4.7 billion.

Venture capital investors accounted for more than half of all deals in the fourth quarter, with 78 transactions worth an estimated $1.1 billion. But it was strategic buyers, such as WPP Group, Comcast Corp. and Microsoft, that accounted for the largest portion of transactions in terms of dollars. Such buyers accounted for $3.4 billion spent, or 72% of the quarter's total.

Private equity players, meanwhile, were responsible for far fewer deals than usual -- only five during the fourth quarter -- thanks to the credit crunch.

Going forward, the tough economy means we're likely to see a buyers' market. "While we expect financing to remain difficult in the near-term, lower valuations and consolidation driven by a tough business environment should present attractive opportunities for strategic investments and opportunistic acquisitions through much of 2009," Michael Petsky, partner at Petsky Prunier, said in a statement.