Marketing and media M&A activity up in Q4

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New York—Merger and acquisition activity in media and marketing increased significantly in the fourth quarter, prompting some optimism for 2010, according to two reports recently released by investment banks.

Jordan, Edmiston Group followed 615 transactions in the media, information and marketing services sectors in 2009 with a combined value of $32 billion. The number of transactions decreased 24% compared with 2008, and the combined value of the deals declined 11%. However, Jordan, Edmiston noted that the fourth quarter of 2009 saw 149 deals, with a combined value of $15.4 billion, almost half of last year’s total deal value.

While the number of b-to-b deals declined 9.1%, from 22 to 20, between 2008 and 2009, the value of these deals skyrocketed in the same time frame, jumping 753.4%, from $417 million to $3.6 billion. Most of the deal value stemmed from a single transaction, the $3.4 billion acquisition of Springer Science+Business Media by EQT Partners in December.

The rising fourth-quarter deal flow makes Scott Peters, managing partner at Jordan, Edmiston, optimistic about transaction activity this year for a number of reasons. “The drivers are a rebound in confidence by buyers; credit returning to the midmarket; seller tax motivation (get 15% cap gains while you still can); private equity trying not to miss the market-low buy opportunities; and large corporations seeing low organic growth using acquisitions to enhance overall growth and buy market share,” he said.

Tracking the advertising, marketing, information and media sectors, investment bank Petsky Prunier also noted a significant uptick in transactions in the fourth quarter of last year, especially involving private equity firms. Private equity funds announced 20 transactions, with an aggregate value of $7.7 billion, in the fourth quarter, compared with 19 transactions, with a combined value of $1.2 billion, in the first three quarters of the year.

“While investment activity trended up, mergers and acquisitions on the part of corporations remained relatively strong. Valuations for publicly traded companies currently are, on average, higher than at any point in 2009. Coupled with a desire on the part of chief executives to refocus on growth, we expect to see higher levels of mergers and acquisitions and investment activity continue into 2010,” John Prunier, partner at Petsky Prunier, said in a statement.

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