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Media M&A reports show robust growth continuing

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Separate reports released late last month by investment banks Jordan, Edmiston Group and Petsky Prunier confirm that merger and acquisition activity in the media and marketing industries is booming. Even with the stock markets experiencing a correction and consumer confidence waning, Scott Peters, co-president of Jordan, Edmiston Group, said M&A activity should be strong through the second half of the year. “We're not in a robust economy, but it's not one that we think will have a negative impact on M&A,” he said. “There's some motivation for sellers because of some tax changes coming up.” He also said credit is not as tight as it had been, which should also help propel deals. Jordan, Edmiston's M&A report focused on deal flow in the media, information and marketing services sector. The number of transactions in the first six months of this year increased 52% from the year-earlier period to 445, while the aggregate deal value surged 291% to $21 billion, according to the report. Database and information services was the largest category in terms of deal value in the first half, with $9.3 billion in transactions. The marketing and interactive services category had the largest number of deals—131. The number of deals in the b-to-b online media and technology category increased almost fourfold to 26, while the aggregate value increased more than fivefold to $363 million. Deals in this category included TechTarget's acquisition of BeyeNetworks, an online network of sites, and Canon Communications' acquisition of Pharmalot, a pharmaceutical industry blog. The b-to-b media category saw similar gains in activity, with the number of deals increasing almost fourfold to 23 and the aggregate deal value jumping more than fivefold to $87 million. The exhibitions and conferences category saw the number of deals decline 40% to 12 and the aggregate deal value fall 25% to $58 million. Peters said the flow of dollars to b-to-b online media and technology was a simple result of dollars chasing growth potential. “At the end of the day, investment dollars in M&A tend to go where the growth is,” he said. “If you think about b-to-b media, we are still in a major period of transition from print to digital, so there's a big interest in chasing or acquiring businesses that are helping to accelerate that transition.” Jordan, Edmiston said private equity firms are beginning to re-enter the market as the 45 private equity deals in the first half was a “sharp increase” over the first half of 2009. Additionally, private equity accounted for the two largest deals so far this year: Madison Dearborn Partners' $2.5 billion acquisition of TransUnion, a credit and information management company, and Silver Lake Partners and Warburg Pincus' $3.2 billion acquisition of Interactive Data Corp., a financial information business. Petsky Prunier's report focused on M&A activity in the marketing, information and digital media industries. It found that the number of transactions in the sectors it tracks increased to 224 in the second quarter, up 11% from the first quarter. The aggregate deal value increased 39% to $12.2 billion, mainly due to the sale of Interactive Data Corp. sale. Petsky Prunier tracks deals across seven segments: advertising and promotion, digital media, interactive advertising, marketing services, marketing technology, out-of-home and specialty media, and software and information. Marketing technology was the most active category, with 69 transactions. Software & information deals produced the largest aggregate deal value—$5.0 billion. “The investment markets are very good at the moment, and the M&A markets are even better,” Petsky Prunier partner John Prunier said in a statement. “Whatever credit support is lacking has seemingly been made up for by the resolve and depth in the ranks of corporate and private equity professionals diligently pursuing acquisitions.” M
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