Jeffrey Dearth is a partner at media investment bank DeSilva+Phillips.
Media Business: How is the b-to-b M&A market looking heading into the summer?
Many of the [b-to-b] companies have gone through the pain of their restructuring, and the ones that didn't [have to restructure] are finding that their balance sheets are in much better shape. So now, instead of managing their balance sheets, they're managing to marketing and margin, and, as part of that strategy, are looking at making acquisitions.
MB: Many b-to-b companies still hold long-term debt. How will that impact the M&A market for the foreseeable future?
The leverage that used to be in M&A deals five years ago no longer applies, and companies are having to write larger equity checks to get deals done. But for the right company and the right strategic fit, [buyers] seem to be more willing to pull the trigger on deals than they were during the economic downturn.
MB: Do you see more boutique-type b-to-b media deals in the pipeline, in terms of buyers acquiring properties that are highly vertical with existing products?
Those are high on the list. We're also seeing a lot more interest in looking beyond content to include digital marketing services-oriented companies, and that's a new phenomenon. I would expect to see some of those types of deals this year, but it's also going to be a longer-term phenomenon.