After being kept at bay the last few months, the sluggish economy is now starting to have a negative impact on b-to-b media deals, according to John T. Shea, COO of media investment bank Berkery Noyes.
“In January and February, people were living off the deals that had carried over from 2007,” he said. “But now there's definitely caution on the part of sellers. People had hoped [the negative impact of the economy] would be confined to the larger-sized deals, but that has trickled down to the medium- and smaller-size deals.”
Asked about Reed Elsevier's recent decision to put its Reed Business Information unit up for sale, Shea said, “That will not be an easy transaction.”
Although rumors abound that British-based private equity firms, including Apax Partners, Permira and Guardian Media Group, are interested in acquiring RBI, Shea said the unit would most likely be broken up and sold in pieces to “buyers strategically looking for what [individual titles] fit” with their existing portfolios.
As sellers hold out for better prices on deals and private equity firms contend with reduced access to capital markets, the b-to-b M&A market will be less active in the spring and summer compared with the same periods last year. “You may start to see things turn around in the fourth quarter or early 2009,” Shea said. —M.S.