Since 2008, much b-to-b media merger and acquisition activity has involved distressed assets that were essentially forced sales. Northstar Travel Media Chairman-CEO Tom Kemp wanted to make sure the market understood that Northstar, recently acquired by Wicks Group of Cos., was not among them.
For this reason, even though Wicks closed its purchase of Northstar from BV Investment Group on June 29, the announcement of the deal was delayed until after the July 4 holiday week to make sure as many people as possible heard the news. “There are no layoffs, no cost-cutting [with this deal],” Kemp said. “From an industry standpoint, what's good about this is that we were able to get a deal closed on a nondistressed asset at a fair market price.”
The Northstar sale is not the only prominent b-to-b media deal of the past month. Two others show that the sector is experiencing a mild revival:
IHS Inc.'s $135 million acquisition of engineering search engine and industrial digital marketing platform GlobalSpec from Warburg Pincus.
Redwood Acquisitions' purchase of CSP Information Group, a publisher of magazines covering the convenience store and restaurant market.
These deals taken together are representative of a small M&A spike that is occurring in the b-to-b media sector and suggest a renewed confidence in the staying power of business information even in the face of sluggish economic growth and the persistent European debt crisis. Investors have renewed confidence in traditional b-to-b media since marketers have continued to use the offerings of these companies, which have expanded far beyond trade publications.
The number of deals in the b-to-b media category in the first half totaled 14, up 75% from the year-earlier period, according to a report from investment bank Jordan, Edmiston Group. Aggregate deal value increase 266%, to $82.0 million.
While the purchase price for Northstar was not disclosed, industry observers said the EBITDA (earnings before interest, taxes, depreciation and amortization) multiple was in the mid-single digits for the $60 million company.
“The management team has done an excellent job of migrating its core business to an integrated information and marketing solutions company,” Dan Kortick, a managing partner at Wicks Group, said in a statement.
Since joining Northstar in 2009, Kemp and his team have diversified the company via deals such as its acquisition of PhoCusWright, a research and events producer in the online travel segment. Kemp said that when he joined Northstar, the company generated 75% of its revenue from print products; now that figure is about 40%. Overall revenue has almost doubled during that period.
“This deal was a win for BV, a win for Northstar and a testament to the positive things we've done in terms of the direction we're taking this company,” said Kemp, who, with the rest of the management team, will be staying with Northstar.
“It appears that quality companies that have put themselves on the market are getting reasonable prices for their assets,” said Mike Parker, managing director of AdMedia Partners. “The fact that Wicks, a private equity company, bought Northstar is an even better sign, because they are responsible for returning capital to their investors and are doubly cautious and doubly interested in the [ultimate] value of a company like Northstar.”
Redwood Acquisitions' deal for CSP Information Group, whose assets include CSP, Restaurant Business
and other properties aimed at the convenience retailing, restaurant and on-the-go food industries, was also a nondistressed transaction. “What was attractive about CSP is that it is a strong, solid platform with several No. 1 properties,” said Kathleen Thomas, managing director at Berkery, Noyes & Co., which represented Redwood in the deal.
Redwood Acquisitions is jointly owned by Michael Wood, co-founder of Hanley Wood, and his son, Mike Wood Jr. Michael Wood is now chairman of CSP, and Mike Wood Jr. is CEO.
While CSP and Northstar offer signs that traditional b-to-b media has, at the very least, stabilized, IHS' deal for GlobalSpec displays the attraction of digital-only media. Jordan, Edmiston said the number of deals in the online b-to-b media and technology category increased 21%, to 47, in the first half, while the aggregate value increased 160%, to $7.9 billion—a figure that dwarfs the $82 million in the traditional b-to-b category.