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B-to-b media valuations not one size fits all

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Robert Garrett and Mark Holdreith are founding partners of Media Advisory Partners, which was formed in 2010. Garrett founded investment banking firm AdMedia Partners and served as its president from 1990 until his retirement in 2007. He has been working in media M&A and investing since the 1970s. Holdreith continues as principal of Moira Group, a boutique investment bank he founded in 2007. Earlier, he was president of the retail division of Nielsen Business Media. Media Business: What are you seeing in media M&A today? Mark Holdreith: While there have been some notable transactions in the past 18 months, a value gap still exists between buyers and sellers of b-to-b media companies because print remains the dominant revenue stream for the average b-to-b media company in markets outside of technology. The M&A market puts a low valuation on these companies even if the print component of the business continues to perform and the company has established meaningful revenue streams across other media platforms and services. MB: Why is that a problem? Holdreith: Some b-to-b media execs argue that if they were extended a multiple that reflects print's value to their respective markets, M&A activity would increase. Robert Garrett: We believe the value is in the media brand, and having the optimal mix of platforms for each specific market drives that brand value, independent of whether it is print, digital or events focused. MB: What could be done to change that? Garrett: Media consumption and marketing strategies are evolving in all verticals, but not necessarily at the same rate, so one mix of platforms will not fit all. Holdreith: We advocate a model for determining company value that goes beyond the conventional single-multiple approach and instead evaluates media platforms separately based on their importance for the vertical market served.
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