John Wickersham is a partner at Atwood Advisors, formerly Quayle Munro Holdings. He is the former CEO of VNU Business Media. He spoke with Media Business about why he's bullish on prospects for mergers and acquisitions activity in b-to-b media—defined broadly to include print, online, events, databases and software.
Media Business: What was your assessment of b-to-b media M&A in the first half of the year?
John Wickersham: I thought it to be fairly slow, surprisingly slow, particularly in the first quarter. It began to pick up in the second quarter. In the third and fourth quarters, I'm imagining quite a significant pickup.
MB: What do you see driving the anticipated growth? And what are some factors still holding back M&A activity in b-to-b media?
Wickersham: There has been a pent-up demand for deals or transactions over the past two years when the conditions haven't been as favorable. Companies have strategic needs—maybe a strategic company wants to focus on its core assets and add things to what they're doing in a part of their company they really want to grow—so they want to add acquisitions, but they've been unable to in the past two years. So they're even more motivated today to get those things done when they have more ability to do those deals now. There is, especially in the traditional media market, a strong, common motivation to focus on your core assets and to really dominate in the sectors you've chosen to dominate in. That's a very common strategy through b-to-b media. It also means that many people want to divest what is defined as their noncore assets. All of those things create transactions. The other piece is the lending market, and that remains somewhat conservative. But lending certainly seems to be available for the larger deals. I see it continuing to move downstream.
MB: What's your assessment of the companies owned by private equity firms?
Wickersham: A lot of the (b-to-b media) ownership resides with the private equity players. They've judged the market to be not so favorable to bringing these companies to market (in the recent past), and only now do they see the winds are more favorable. I'm seeing many more private equity companies going to market with these companies. They've been with these companies for such a long time—and sometimes they are even investments beyond their 10-year time frame—so there's a lot of pressure on the part of the limited partners who are supporting the private equity funds to realize their returns.
MB: Do you think the industry and the M&A market have adjusted to the new reality facing b-to-b media?
Wickersham: There's a developing ideal business model for business media. The old model had to do with scale. You would gain economies of scale, and, in fact, the thought was originally that you could apply similar strategies to very disparate markets. The reality has proved to be the opposite today, and the realization that online media requires focus and requires unique strategies per market.
MB: To what degree do you see advertising on social media sites such as LinkedIn as a threat to b-to-b media revenue?
Wickersham: I haven't heard much advertising moving in that direction. However, I do agree that there is fairly vast potential there. I think if LinkedIn does it right, it could become a formidable competitor for b-to-b ad dollars. If they do it right. I think you were around when VerticalNet first came in. [VerticalNet] did a lot of things wrong. They had a real opportunity.