Traditional b-to-b media experienced a sour year in 2011 when it came to merger and acquisition activity, according to data released by investment bank Jordan, Edmiston Group. The number of deals in the sector decreased 62%, to 14, and the aggregate deal value plummeted 91%, to $50 million.
Chastened by high-profile deals over the past decade for media properties that eventually underwent financial restructurings, such as Veronis Suhler Stevenson's $1.1 billion acquisition of Advanstar Inc., private equity players are investing in the digital and marketing services sectors as marketers move more of their budgets into these areas. Large private equity deals for interactive companies in 2011 included Kohlberg Kravis Roberts & Co., Silver Lake Partners and Technology Crossover Ventures' $2.3 billion deal for Go Daddy Group.
Digital advertising spending is expected to rise 18% this year, to $36.8 billion, according to projections from eMarketer. That figure doesn't include spending on marketers' own websites, which Outsell Inc. estimates at more than $60 billion annually. That kind of spending is a partial explanation for deals such as Oracle's $1.1 billion acquisition of Endeca Technologies, which helps marketers such as Avnet and W.W. Grainger improve the e-commerce efficiency of their websites.
Overall M&A deal value in the media, information, marketing services and technology sectors increased 9% to $47.0 billion in 2011, according to Jordan, Edmiston. The number of deals in these sectors rose 2% to 896.
Marketing and interactive services was the most active category tracked by Jordan, Edmiston, with 291 deals (up 17% over 2010) and $15.1 billion in deal value (up 33%).
“Overall, the interactive markets, including b-to-b and b-to-c online media and technology, and mobile media and technology, as well as marketing and interactive services, accounted for 71% of M&A deal activity for the year and 65% of the value,” Jordan, Edmiston said in a press release.
The b-to-b online media and technology category posted a gain of 3% in the number of deals to 63, and a 132% increase in deal value to $6.0 billion.
Tracking deals in the marketing, media, technology and service industries, investment bank Petsky Prunier reported that the number of deals increased 187% in 2011 to 3,026, and the aggregate deal value grew 152% to $141.6 billion. Digital media/commerce was the most active segment, with transactions reaching 1,159 and deal value totaling $44 billion.
According to Petsky Prunier, the second most active M&A segment in 2011 was marketing technology, which had 338 transactions valued at a combined $21.9 billion. Among the largest transactions in this segment was another acquisition by Oracle, a $1.5 billion deal for RightNow Technologies.