Despite pent-up demand among both private equity companies and strategic players, M&A activity in the media sector will probably stay sluggish for the rest of the year because of a lack of financing, said Mike Parker, managing director of media investment bank AdMedia Partners.
“2009 is going to be slow all the way around,” he said. “The "fear factor' is strong everywhere; and the economy needs to improve and the stock market needs to bounce back in order to free up a lot of potential deals.”
Online media properties and interactive marketing services remain the most attractive assets to buyers, Parker said. For example, in February AdMedia Partners represented Mr. Youth, a social marketing agency that focuses on word-of-mouth, social interactive and experiential marketing, in a sale to private equity companies Alta Communications and Mustang Group. Financial terms of the deal were not disclosed.
“There's a lot of pent-up demand on the private equity side that should get some traction in the second half of the year,” Parker said.
Strategic players will continue to focus on acquiring small and midsize properties that can complement existing portfolios, but the deal volume will be moderate, Parker said. He added that there are “a couple of potential b-to-b deals that should get done this year because they're a function of need.” He declined to be more specific. —M.S.
DO: Buyers should continue to look far and wide for potential acquisitions, particularly in the distressed properties category.
DON'T: Despite all of the discouraging economic news, buyers and sellers need to avoid panic.