The pace and dollar value of mergers and acquisitions in the b-to-b trade magazine/trade show sector plummeted in this yearâs second quarter, according to Whitestone Communications Inc.âs "Whoâs Buying Whom" report.
B-to-b M&A activity overall was down 75.5% to $39 million, and there were 13 fewer deals than in the second quarter of 2001, according to the report, which tracks data from multiple sources.
Economic uncertainty was the biggest factor behind the dramatic drop. "M&A activity is driven by business confidence," said Baran Rosen, president of Whitestone. "You have varied economic performance, which leads to Wall Street getting the jitters. Then prices go down, and businesses get nervous about the future of the economy, so they want to do fewer acquisitions."
Whitestone counted 14 deals for the first half of 2002, 22 less than in the year-earlier six-month period. The total value of the deals in this yearâs first half was $121 million, down 61% from the first half of 2001. An upturn in 2002âs second half isnât likely, Rosen said.
Wilma Jordan, CEO of Jordan, Edmiston Group Inc., said that while the number of deals for the first half of this year was down from a year earlier, her firm did several b-to-b transactions. This included two substantial deals: the sale of Vulcan Publications Inc.âs construction and industrial divisions to Cygnus Business Media and the sale of the AIIM International Exposition to Advanstar Communications Inc.
"If I had to guess, it was down about 10% in the number of transactions," Jordan said. She predicted the second half might be slower. "The banks are a little preoccupied due to WorldCom and Tyco and so forth, and you need good bank financing" to complete those deals.
Jordan, Edmiston is currently working with some potential buyers "whoâve integrated past acquisitions and now want to do more," Jordan said.
Roland DeSilva, managing partner of DeSilva & Philips, said his companyâs b-to-b deals in the first seven months of this year were greater in dollar value than those completed in the same period in 2001. DeSilva & Philips recently handled the sale of ACC Communications Inc.âs Workforce to Crain Communications Inc., which publishes BtoB. DeSilva said he believes the worst is over for the b-to-b media industry. "For the remainder of 2002, it will show modest, if any, increases."
DeSilva forecast a recovery in 2003. "Our pipeline of potential deals in encouraging," he said.