Media M&A market still going strong

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The b-to-b media M&A marketplace has been going gangbusters for more than two years now—and the party shows no signs of slowing down in 2007.

According to a survey released last week by media investment bank AdMedia Partners, 71% of media executives expect their companies to participate in a deal this year. The media investment banking firm's third annual Top Management Survey was conducted in November at American Business Media's Top Management Meeting in Chicago. The meeting drew a record 310 attendees, about 15% of whom took the survey.

Looking ahead, 55% of the respondents said they would be buyers in 2007, while 16% said they would be sellers. In terms of assets, 45% said they would be buyers of magazines and 16% said they would be sellers; 45% said they would be buyers of events, but only 6% said they would be sellers of events.

The study did not track the potential buying and selling of pure-play Internet properties. However, one-third of respondents cited the emergence of interactive and digital media as the single most important factor affecting this year's b-to-b M&A market.

Valuations for all forms of business media are expected to be strong this year, according to AdMedia Partners. The multiple for magazines is expected to be 7.3 times EBITDA (earnings before interest, taxes, depreciation and amortization), and the multiple for events is expected to be 7.6. The multiple for interactive/online assets will be a loftier 9.5.

This year's M&A activity will be building on a particularly strong 2006.

Last year, there were 637 transactions valued at more than $60 billion, breaking the previous highs achieved in 2005 by 18% in deal activity and 12% in total deal value, according to media investment bank Jordan, Edmiston Group.

The number of online media deals rose 55%, while the value fell 26% to $8.9 million. Educational and professional publishing deals increased 244% in value to $3.70 billion, despite a 52% drop in the number of deals. The number of b-to-b magazine deals fell 8.7%, to 42 from 46; the value rose 140%, to $6.00 billion.

A separate survey from media investment bank DeSilva & Phillips pegged the dollar volume of media deals last year at $20.50 billion—the strongest year since 2000. The dollar volume includes transactions for consumer and business magazines, medical media, trade shows and conferences, Internet, and database and marketing service companies.

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