Buyers expected to outnumber sellers in 2005 M&A market

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A survey of business media executives released Tuesday indicated that the mergers and acquisitions market in b-to-b media continues to have far more buyers than sellers.

"With there being so much demand and not enough product available, in order to get a deal done, people are going to have to come up to the seller’s expectations, because it’s definitely a seller’s market," said Robert Crosland, managing director at media investment bank AdMedia Partners, which conducted the survey.

Forty-seven business media executives participated in the "M&A Snapshot Survey," which was distributed at the American Business Media Top Management Meeting, held Nov. 15-17 in Chicago. AdMedia Partners described the respondents as "a substantial sample within the ABM universe."

The survey showed that "prospective buyers outnumber prospective sellers by a wide margin." In the magazine arena, 68% of respondents said they would be buyers in 2005; 22% said they would be inactive; and just 10% said they would be selling a magazine or magazines.

As for event M&A activity next year, the numbers were similar: 51% described themselves as buyers, 44% as on the sidelines and 5% as sellers.

Additionally, nearly half (47%) of respondents participated in a transaction in the past year, either as a buyer, seller or both. The average transaction multiple of trailing 12 months EBITDA (earnings before interest, taxes, depreciation and amortization) was 6.5 for magazines and 6.8 for events.

In the coming year, respondents said they hoped to buy magazines at a 6.1 EBITDA multiple and events at a 6.3 multiple.

On the other side of the table, respondents said they hoped to sell their magazines at a 7.8 multiple and events at a 7.9 multiple. The actual multiple of deals to be completed in 2005 will probably fall somewhere in the middle, Crosland said, even with sellers having the upper hand.

The survey found that 91% of the respondents that participated in deals in the past year anticipate being either a buyer (77%) or a seller (14%) in the coming year. And 63% of the participants that were not active in transactions in the past year expect to be either buyers (58%) or sellers (5%) in 2005.

Apart from the imbalance between buyers and sellers, Crosland interpreted the survey responses as an indication that the b-to-b media M&A market had returned to a semblance of normalcy after the excesses of the dot-com boom and the uncertainty following 9/11.

"This is about typical," he said, "but I mean the truth occurs on each individual transaction. Everyone goes into a deal saying, ‘Here’s what I want,’ and everyone is faced with the reality of what people are offering. It comes down to ‘Do you want to sell or not?’ "

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