Waiting for the big ones

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While there has been a flurry of mergers and acquisitions in the past few months, and reports show that overall deal activity has been significantly higher than in 2003, some industry experts say this year hasn't lived up to expectations.

"There have been more b-to-b deals this year, but for the most part it's been small stuff," said Robert Crosland, managing director of media bank AdMedia Partners. "Only the Advanstar acquisition of some Thomson Media medical properties [last October] and United Business Media's purchase of MediMedia were more than a blip on the radar," he said. "Sure, there were many deals that were important to the parties involved, but looking at the overall M&A landscape it's been pretty unexciting."

Crosland noted the Advanstar and UBM deals came in the health care sector and did not serve as a bellwether for other deals. "The health care industry runs on its own cycle that's often counter to the overall state of the economy," he said. "Media companies have been looking at medical properties to steady their portfolios in this uncertain economy, and such deals have garnered tremendous multiples."

Many in b-to-b publishing are looking for a catalyst to open up a reportedly robust deal pipeline, and Crosland and others believe it may come when Thomson finally sells its media unit. "It should be a huge deal, in the $150 million to $200 million range," Crosland said. "The telling point will be what EBITDA multiple they get for it. If they get a handsome offer, say in the double-digit multiple range, it will be a great sign for other deals. If it's only in the eight-to-10 times range, then things may continue to stall in the b-to-b M&A arena."

Meanwhile, there have been several smaller deals in recent months. These include:

  • Mercor Media, which publishes architectural, engineering and construction titles, merged with ZweigWhite, a consulting and information company serving the same industries, to form Zweig White Information Services. "ZweigWhite's consulting and research know-how beautifully marries with Mercor's media properties and diversifies revenue streams," said Roland DeSilva, managing partner of media bank DeSilva & Phillips. "It's a classic example of how to vertically integrate to better serve a market."
  • Dolan Media Co. acquired Lawyers Weekly, a publisher of 14 newspapers and associated Web sites. The properties include Lawyers Weekly USA and several regional publications. The titles have a combined circulation of 93,000 and reach more than 150,000 attorneys. "With this acquisition, law now generates more than half of our revenues," said James Dolan, the company's president-CEO.
  • Private-equity firm Post Capital Partners acquired privately held Agent Media Corp., a direct marketing and publishing company serving the life, health and annuity segments of the U.S. insurance industry. Agent Media publishes Agent's Sales Journal and Insurance Marketing, and has a database of 1.2 million independent insurance agents.

Financial terms of the three deals were not disclosed.

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