MB: Why is the current M&A market in b-to-b media so strong?
Kemp: It's a combination of four things. One is pent-up M&A demand from both sellers and buyers. There wasn't a lot of action in the weak period from 2002 to 2003. Strong properties didn't want to go to market in a weak M&A market. No. 2 is that the debt market has improved significantly. In many ways, this is the most important thing. The reason that multiples are as high as they are is that the debt markets are very aggressive. ... Third is there's a still a lot of private equity capital that's looking to invest. And No. 4, there's a perception that not only has the b-to-b media sector bottomed out but [it] is now growing, although moderately, again.
MB: VSS has been a significant factor on the sell side. Should we expect the firm to be active on the buy side?
Kemp: Traditionally, VSS has invested about 30% to 35% of available capital in b-to-b media. Currently our investment portfolio [in b-to-b media] consists of Ascend Media [held jointly with JPMorgan Partners], and Access Intelligence, run by Don Pazour. The third and more recent investment we've made is through our mezzanine fund. We have an investment in small but fast-growing Schofield Media in Chicago.
MB: Are you enjoying your new role compared with your past experience in management?
Kemp: I enjoy it very much. My job has transformed modestly from when I first came in here, in that, officially, I'm part of the fund operations. The nexus of the business has clearly moved toward investing in media companies as opposed to third-party transactions. I'm now focused on our fund activity both in terms of providing strategic and management advice with our existing fund companies as well as looking for new investment possibilities for our newest fund.