B-to-b media M&A activity forecast to heat up

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Coronado, Calif.--There is a pent-up demand for media mergers and acquisitions, according to a survey completed last month by media investment bank AdMedia Partners.

The survey, titled “Prospects for Media Mergers and Acquisitions,” queried 998 media and financial executives. Seventy-five percent said there is a pent-up demand in media M&A activity. At the same time, 66% of respondents said traditional media companies, known as strategic buyers, would begin boosting M&A activity in 2004. More respondents--72%--said that financial buyers would boost their M&A activity.

The rise in activity from financial buyers will come primarily from this sector’s increased willingness to pay more for properties than in the past few years, according to 64% of respondents. Only 29% of respondents said they expected sellers to decrease their valuations this year.

The level of M&A activity will vary by sector, although most respondents expected the number of deals would be “moderate” this year. For instance, 59% said b-to-b publications would have moderate M&A activity this year, while 29% predicted strong activity.

Similarly, in the database and business information sector, 62% of respondents expected moderate activity, and 36% said the deal flow would be strong. In the trade show arena, 58% expected moderate deal flow, while just 19% expected strong action in the sector.

A key factor in the expected slight increase in deals is the loosening up of lending by commercial banks. This year, 23% of respondents expected banks to relax “cash-flow lending criteria.” In 2003, only 10% of respondents thought that banks would loosen the criteria, and in 2002, only 8% thought that the criteria would be relaxed.

--Sean Callahan

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