No letup in sight for M&A surge

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Michael Marchesano is managing director of media investment bank Jordan, Edmiston Group. Prior to joining Jordan, Edmiston in 2007, he was exec VP-chief transformation officer at Nielsen Co. Media Business: Do you see the recent surge in media M&A continuing this year? Michael Marchesano: It will continue, and it'll be driven by 18 months of seller buildup, the expected increase in capital gains taxes in January 2011 that will pull sellers forward in 2010 and many strategic buyers having healthy balance sheets and wanting to accelerate growth via acquisitions. Private equity companies are also becoming more active as buyers because they need to deploy capital, which has built up from their inactivity in the last year and a half. MB: How do you see valuations for media companies shaping up? Marchesano: Multiples for online media, interactive marketing services and database/subscription-driven companies have remained relatively strong, even through the economic downturn. Overall, valuation multiples for media and information companies are rebounding from lows reached in the second half of 2008. MB: How are data and targeting changing social media monetization? Marchesano: The utilization of data, analytics and targeting to improve ad performance online will continue to rise through 2010 and beyond, as the interactive marketplace shifts from selling “sites” to selling “audience.” Companies that provide scale in these areas, can deliver double-digit revenue growth and show a clear path to profitability will see attractive multiples and a deep pool of buyers. —Matthew Schwartz
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