Speculation at ABM Spring Meeting that a deal for Hanley Wood may be imminent

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By Sean Callahan

Boca Raton, Fla.—American Business Media said Monday that it has set an attendance record at its annual spring meeting, being held Sunday through Wednesday in Boca Raton, Fla. But a focus of discussion at the meeting was on two men who weren’t there: Frank Anton, president of Hanley Wood, and Peter Goldstone, head of Hanley Wood’s magazine division.

The absence of these two Hanley Wood executives fueled speculation that the construction industry media company was on the verge of being sold by its owner, a private equity fund operated by Veronis Suhler Stevenson. Final bids were due Friday, according to people familiar with the situation, who indicated that a deal could be completed as early as Monday. "Any day now," said one investment banker.

Informed sources said Blackstone Group, which is backing Robert Krakoff’s Blantyre Partners; a J.P. Morgan private equity fund and private equity player J.W. Childs Associates were among the competing bidders. The EBITDA (earnings before interest, taxes, depreciation and amortization) multiple would likely be more than 12 times, placing the price at $660 million or more, sources said.

Another rumor was that the existing Hanley Wood management team might buy the company with the help of a private equity backer.

Speculation at the meeting also surrounded the interest in Primedia Business Magazines & Media. A deal for that unit appeared less imminent, although Charles McCurdy, whose Apprise Media just bought Canon Communications from a VSS private equity fund, may be interested in the company he once bought for Primedia.

The surge in merger and acquisition activity in b-to-b media is due to a confluence of factors: the resurgent strength in the industry, the presence of private equity cash and the availability of bank debt.

The industry’s strength is apparent from the well-attended spring meeting. Gordon Hughes, president-CEO of ABM, described the industry’s recent growth as "a rocket ship."

Penton Media CEO David Nussbaum’s presentation gave one example as his company last year turned in its first full year of revenue growth since 2000. And SRDS Group Publisher Stephen Davis, discussing the new code of ethics being created by the ABM’s publishers committee, cracked, "When publishers are talking about ethics, you know times are getting better."

In addition to improving top and bottom-line results, private equity’s interest in b-to-b media is no secret. Many funds, though, have sat on the sidelines while potential sellers waited for better times in order to command higher prices. Now that those better times appear to have arrived, sales are taking place.

David VanderLugt, director-media & communications finance at Goldman Sachs Specialty Lending Group, said that one deal with a strong multiple can set off a chain reaction of selling. "It’s a snowball effect," he said.

An additional factor is the willingness of banks to loan money—even up to historically high EBITDA multiples of seven times. David Harrington, senior VP at GE Commercial Finance, said banks believe b-to-b media has stabilized and that its niche, targeted model is in synch with what advertisers want.

The combination of available bank debt, ready and willing private equity money and a strengthening b-to-b market has led to high EBITDA multiples. Some observers pointed to the recent sale of Canon Communications, which was said to command a 12-time multiple, as motivation for Primedia to put its b-to-b information unit on the block.

"Deals lead to more deals," VanderLugt said.

Observers, however, expressed caution that the multiples couldn’t go much higher without jeopardizing return.

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