BtoB

Looser financing should spur more deals

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Michael Parker is a managing director at AdMedia Partners, a mergers and acquisitions firm he joined in 2007. Previously, he was senior VP of Nielsen Business Media's marketing and media group. He recently discussed his expectations for M&A activity this year in the b-to-b media sector.

Media Business: There was a surge in M&A activity in b-to-b media in the fourth quarter of 2009. Do you expect that to continue in 2010?

Parker: We do expect M&A activity to be relatively robust in 2010. It's a combination of several factors. Assuming the economy continues to improve, financing will loosen up and valuations will increase. There is significant pent-up demand to encourage deal-making for quality companies. Likewise, for distressed properties, there are buyers still looking for good deals. Finally, the impact of the expiration of the capital gains rate and likely increase will encourage privately owned/family companies to take a hard look at growing enough over the next couple of years to offset the increase versus selling in 2010. On the other hand, if the economy does another nose dive, all bets are off.

MB: B-to-b media as an entire industry is contracting: What remains attractive about the industry?

Parker: The strong b-to-b media companies will survive. Businesses will continue to need information that will help them operate more efficiently, no matter what the delivery platform ends up being. Those media that are editorially strong and with information that can't be obtained elsewhere will prosper. Those that are not significantly dependent upon advertising but that are predominantly subscription-based will do well. Those that have developed strong digital and face-to-face products should be able to benefit from both revenue streams.

MB: Are buyers and sellers coming closer together in their valuations? How will that impact M&A activity?

Parker: It's premature to say in late January that valuations are becoming closer, but it's highly likely that we will see this given the limited supply and expected higher demand. There are several b-to-b companies that appear to be recovering nicely based on their mix of products.

MB: Do you foresee b-to-b media companies looking to acquire in the digital sector?

Parker: Absolutely. There are likely a handful [of b-to-b media companies] that will hire experts and try to build their digital platforms themselves; but, if you look closely at those that have already done so, there are more failures than successes. It's a safer and less expensive bet to buy the tried-and-true expertise.

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