Wait for multiples to bounce back

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Tom O'Connor, managing director of media investment bank Berkery Noyes, recently discussed how the M&A market is shaping up for the rest of the year. Media Business: What's your outlook for the media M&A market? O'Connor: We do think we'll see the amount of deal flow continue to improve through the balance of 2010 and really take off in 2011. What we have seen is private equity firms selling their portfolio companies and some corporate divestitures, such as [Reed Elsevier liquidating most of its b-to-b portfolio in the U.S.], but what we haven't seen is the entrepreneur step up. However, we do think the entrepreneur who wants liquidity, considering the conversations we've been having, will be part of that deal flow in 2011. MB: What kinds of media properties are buyers eyeing these days? How is the appetite for events? O'Connor: Both financial and strategic buyers tend to look for the same types of properties. If you're in the events business right now, you're probably not selling. There have been a lot of event deals [recently] because the multiples have been down, so sellers are now waiting for multiples to come back up. But everybody's looking for digital solutions, Web-enabled properties, SAS-type models and more online solutions on the advertising front. MB: Do you see the trend of traditional publishers acquiring marketing services companies accelerating in the next several months? O'Connor: You will see large, strategic buyers looking more and more at concentric and neighboring markets. Some publishers have limited growth in their core markets, so they're looking for marketing services companies as a way to pick up the growth and see these types of companies as an extension of their core products.
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