Jordan, Edmiston report shows dealmaking increased year-over-year in the first quarter
The mergers and acquisitions market is trying hard to recover.
M&A activity in media, information, marketing services and technology rebounded gingerly in the first quarter, according to tabulations released recently by media investment bank Jordan, Edmiston Group.
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. Sequentially, however, aggregate deal value fell 43% in the first quarter compared with the fourth quarter of 2009, even as deal volume rose 58%.
“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 six 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).
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 from 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 Nielsen Co. and Reed Elsevier, both of which are shedding most of their trade publishing titles. “What's going on in the market is it's the end of an era,” said Ed Fitzelle, managing director of Whitestone Communications. “You have Nielsen and Reed both divesting b-to-b publications in deals. Clearly, they're getting out of the market.”
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.
Separately, a report issued 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. M