A recent trio of acquisitions by Ventiv Health, HCPro and Wolters Kluwer spotlights the dilemma faced by small and large medical media companies.
With customers' needs growing, small self-funded companies find themselves in need of capital to grow. Larger companies, meanwhile, want to broaden their media offerings but don't want to start from scratch.
Now the two parties are meeting at the negotiating table, leading to acquisitions that boost the bottom line from day one and a medical media M&A marketplace that is expected to stay healthy well into 2006.
"Everything, except for drug companies, is going great guns," said Robert Crosland, managing director of media investment bank AdMedia Partners.
Still, even media companies serving the pharmaceutical segment are looking to bulk up.
That's the case with Ventiv Health's pending acquisition of inChord Communications for $185 million. When the deal closes later this year, Ventiv gains a new communications division with scale and credibility, said Eran Broshy, Ventiv's CEO.
"[Customers] are rethinking the need to start earlier, how to deploy spending and do better and earlier marketing," he said. "We were poised to address a portion of it reasonably well. But we were not as well-poised as we are with this combination."
For 18 months, inChord had been mulling how to generate capital to keep the business growing. Ten years ago, the Westerville, Ohio-based company had 25 employees and $2.5 million in revenue. Now, it has 650 employees and revenue of $110 million.
"A lot of the capabilities that we would have liked to build with a venture partner, Ventiv already had. So growth will come quicker," said inChord Chairman-CEO Blane Walter, who will become president of the communications division.
Sellers report there is no shortage of suitors in the field. Private equity firms are looking to invest in media serving traditional markets such as health care while strategic buyers are filling niches in their existing operations.
"A lot of these companies are saying, `In order to service the pharma clients, we have to be more broad-based and more flexible,' " said Charlie Hunt, managing director at DeSilva & Phillips. "They are looking at their strategic positioning in order to see what companies they can acquire to be more competitive and flexible, and expand their client base at the same time."
With its purchase of HealthLeaders Media from Decision Resources, HCPro gets its first controlled-circulation title, along with e-mail publications and events.
"It gets us into a new space," said HCPro President-CEO Bruce Guzowski. "We wanted to get into that business for some time and frankly didn't have the courage to do it from scratch."
Wolters Kluwer Health's purchase of Boucher Communications rounded out its offering in the vision segment and creates a "soup to nuts" solution for clients, said Ray Thibodeau, VP of Wolters Kluwer Health Medical Research.