Hanley Wood deal signals continuing M&A strength

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New York—In response to Thursday’s announcement of the $650 million sale of Hanley Wood by a Veronis Suhler Stevenson private equity fund to an investment group led by JPMorgan Partners, the b-to-b media industry breathed a sigh of relief. The deal indicated that the mergers and acquisitions market for b-to-b media remains strong.

"I’m happy because JPMorgan is a great buyer," said Mike Wood, CEO of Hanley Wood, who will retire when the deal closes, although he will remain on the company’s board.

JPMorgan edged out J.W. Childs and Blackstone Group to win the auction. DeSilva & Phillips, Credit Suisse First Boston and O’Melveny & Meyers advised JPMorgan Partners on the deal.

The length of time it took to complete the agreement, which was expected to be announced at the beginning of May, provided some suspense in the industry. The delay led to speculation that Hanley Wood was not getting its price or that the roiled bond markets were delaying the deal.

Wood said only the latter was true. He said he was pleased with the trailing multiple, which he calculated at 13.8 times trailing EBITDA (earnings before interest, taxes, depreciation and amortization).

Joel Novak, managing director of media investment bank Berkery, Noyes & Co., agreed that the price was robust. "I think it’s a win-win for buyer and seller," he said. "It’s a franchise with tremendous potential for growth."

The deal marks the continuation of a strong run for VSS, which sold Canon Communications for what most industry observers consider a strong price earlier this year.

The question now remaining is whether Hanley Wood can continue the growth it delivered for VSS for JPMorgan Partners. With the exception of Wood, JPMorgan Partners will have the same Hanley Wood management team in place, with Frank Anton taking over as CEO.

"Our goal is to continue the dramatic growth that Hanley Wood has achieved during our partnership with Veronis Suhler Stevenson," Anton said in a statement.

Some industry observers doubt that the housing market can continue its remarkable run. Wood does not share that uncertainty. If the population continues to grow, construction will be a fact of life, he said.

In his semi-retirement from the company he founded with Mike Hanley in 1976, Wood said he plans to play as many of the Top 100 golf courses as he can. More important, he also said he is contemplating entering the construction business himself, which displays a definite confidence in the industry.

"Maybe I’ll buy a beautiful piece of land and turn it into something even more beautiful," he said.

—Sean Callahan

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