M&A activity in the media and marketing industries was strong in 2011, with the number of transactions increasing 15% over 2010 and the value of the deals rising 41%, according to investment bank Berkery, Noyes & Co. B-to-b media, however, lagged. Evan Klein, managing director of Berkery, Noyes, explained how digital spending has constricted b-to-b media activity and discussed some areas where b-to-b media companies might be looking to buy in the future. Digital Directions: How do you see the future of M&A for b-to-b media this year, and how is it being impacted by the digital arena? Evan Klein: Unfortunately, I'm not sure it's bright. The reason there hasn't been deal flow is the lack of growth in the sector and competition from the Internet over the last few years. There's nothing in their favor right now. They have to spend more to ship the magazines. They have to have digital programs that cost additional money. I see a “last man standing” in each industry sector. Each industry will have one or at most two trade magazines, which will be integrated with online and an event. That's what's going to happen in the next few years, so I don't see the deal flow picking up. I was speaking to one b-to-b media owner recently who wanted a 7x-to-8x (EBITDA—earnings before interest, taxes, depreciation and amortization) multiple, but the market is 5x. Right now, unless it's a distressed asset, the owners aren't selling. Especially when advertising is up, they're not going to sell. DD: If b-to-b media companies aren't selling, do you foresee some of these companies beginning to make acquisitions in the digital arena? Penton Media, for instance, acquired digital agency EyeTraffic Media last year. Klein: Hearst (Corp.) and Meredith (Corp.) are perfect examples of that. Meredith has a fairly substantial marketing services business. They have relationships with a tremendous number of advertisers, and they want to offer more resources. They're building a pretty big marketing services infrastructure. Hearst is another company which is very aggressive in the marketing services area. I think you're going to see consolidation within the (b-to-b media) industry. We have a number of trade show deals in the works. Consolidation is going to continue until the last man standing.