The number of deals increased 70% to 234 in the first quarter compared with the year-earlier period, and aggregate deal value leaped by a factor of five to $8.2 billion in the same time frame. Sequentially, however, aggregate deal value fell 43% in the first quarter of this year compared with the fourth quarter of 2009, even as deal volume rose 58% in the same time frame.
“M&A is still going through a very hard time, and the market has not quite bounced back yet,” Scott Peters, co-president of Jordan, Edmiston, said in an interview.
The rise in deal volume and value was driven by five of the 10 sectors that Jordan, Edmiston tracks: b-to-b online media, b-to-c online media, b-to-b media, database and information services, marketing and interactive services, and mobile media and technology.
In b-to-b online media, M&A activity exploded in the first quarter compared with the year-earlier period. The number of transactions jumped to 36 (up from three) and the total value ballooned to $407 million (up from $16 million). Jordan, Edmiston identified AOL's $36.5 million acquisition of StudioNow, a platform to create online video and animation, as a notable transaction.
M&A activity also grew in the traditional b-to-b media sector, with the number of transactions leaping to 14 in the first quarter of this year compared with three in the same period of 2009. Similarly, deal value increased markedly to $71 million, from $5 million.
Driving much of this transaction volume were business information giants Reed Elsevier and Nielsen Co., both of which are shedding most of their trade publishing titles. Key deals in the quarter included Sandow Media's purchase of Interior Design and other titles from Reed Elsevier's Reed Business Information US and Northstar Travel Media's acquisition of Nielsen Business Media's travel group.
A good portion of the deals in the b-to-b media segment were backed by private equity funding. For instance, Sandow Media is backed by Veronis Suhler Stevenson, and Northstar Travel Media is backed by Boston Ventures.
Overall, however, private equity—with credit markets still not entirely thawed—has remained on the sidelines. Of the 234 transactions announced in the first quarter, just 32 (14%) were led by private equity firms or by private equity-backed companies. Strategic buyers, many of them flush with cash after hunkering down in the recession, have been doing most of the buying in the media, information, marketing services and technology sectors.
Separately, a report issued Wednesday by investment bank Petsky Prunier also found that M&A activity in the marketing, information, and digital media industries is mounting a tentative comeback. During the first quarter, the investment bank tracked 201 transactions worth a combined $8.8 billion.
Of these deals, 123 (valued at an aggregate of $6.9 billion) were made by strategic buyers, which accounted for 61% of deal flow and 79% of the total value. Private equity and venture investors accounted for 71 transactions valued at a combined $1 billion.