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Signs of an M&A rebound

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This year will be a pivotal, transformational one for b-to-b media. Regardless of industry sector, everyone across the media landscape should accept the fact that users of b-to-b marketing and information products constantly expect and demand more relevant, timelier products and services. The challenge is that customers of b-to-b media companies will go wherever they need, including beyond traditional media sources, to satisfy their growing needs. This acceptance of new media and technology by b-to-b media customers is putting huge pressure on the human and capital resources—already in short supply—of many b-to-b media companies.

At Jordan, Edmiston Group Inc., we have seen signs of a rebound in M&A activity. The number of M&A deals and transaction value were up 18% and 128%, respectively, in Q4 2009 versus Q4 2008 across the b-to-b media, information, marketing services and related technology sectors. The b-to-b media sector, which comprises magazine-related and integrated media transactions, showed a significant rebound quarter-over-quarter.

For some time, JEGI has been predicting that the b-to-b media industry would undergo significant transformation and consolidation, resulting in two or three market leaders serving each sector. We anticipate the level of M&A activity to accelerate even further in the year ahead as: 1) smaller b-to-b media entities seek shelter within larger conglomerates; 2) large, international b-to-b media companies determine how they can continue to attain market leadership in their chosen sectors.

Buyers and sellers of b-to-b media businesses will be facing a brave new world. There will be significant b-to-b acquisition opportunities that will do well for opportunistic buyers with the resources to accomplish what the former owners could not achieve. Sellers of quality businesses should understand that major b-to-b media companies need acquisitions—both transformative and niche—to propel their growth in this period of economic recovery in the midst of secular change. So, above all, think clearly about what you are trying to achieve via M&A, create a sensible game plan and then stick to it.

Richard Mead is a managing director at Jordan, Edmiston Group Inc. (JEGI), an investment bank to the media industry. He can be reached at richardm@jegi.com.

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