Despite the rocky economy that is having a negative effect on major media deals, small and midsize deals are getting done, said Scott Peters, a managing director of media investment bank Jordan, Edmiston Group.
“There's still a good amount of activity in the middle market, counter to what a lot of people are reading,” Peters said. Within the middle and smaller M&A markets, he said, buyers continue to be attracted to subscription-based businesses and marketing services companies.
“Buyers continue to focus on Internet-related businesses, such as search, that work with b-to-b models,” Peters added. “We're in the kind of market [in which] leading assets will still trade at full valuations.”
As an example, Peters pointed to Pearson's Financial Times Group's acquisition in January of Money-Media. The FT Group acquired Money-Media from CEO Michael D. Griffin, the sole voting shareholder, for $64 million, or four times the company's revenue. (Jordan, Edmiston represented Money-Media in the transaction.)
“The strategic companies have been doing well and have healthy balance sheets,” Peters said, “Now is the time they're looking for both transformative business models and people who understand business models.”
Don't: Sellers should not go to market without addressing how transformative busi-ness models are affecting their business both positively and negatively.
Do: Sellers should make sure they go to market with a strong man-agement team and a deep bench that can participate in the next chapter of the company.