The first three quarters of 2010 saw 651 M&A transactions worth $32.9 billion announced across the media, information, marketing services and technology sectors, as tracked by JEGI. The number and value of M&A transactions in the first three quarters of 2010 increased 42% and 95%, respectively, over 2009 levels. The surge was led by corporate buyers driving 86% of the transactions announced. These “strategic” buyers have unprecedented levels of cash on their balance sheets, with the S&P 1500 companies holding more than $1 trillion in liquid assets. Large cap companies in particular have increased their liquidity, the S&P 500 increasing their holdings of liquid assets by 46% since 2008.  

“Value of Information?”  The good news in regards to M&A – it is no longer 2009, when deal activity was off 70% from 2007 levels. In 2010, the market has recovered smartly, with sizable increases in deal activity and value.  Strategic buyers are dominating the market and public valuations for MITX sector companies have recovered substantially from the trough of 2008. Revenue multiples have increased  dramatically, for agencies on the low-end up to SaaS business models on the high-end. Media and marketing spending has gone through secular shifts. In 2009, spending on digital marketing surpassed spending on traditional media; media companies have responded to this trend via M&A – adding “below the line” marketing services – such as Hearst’s acquisition of iCrossing; Meredith’s acquisition of Hyperfactory; and Gannett’s acquisition of PointRoll.

There is ongoing consolidation in media and marketing – most interactive marketing services firms of size have traded in the past 9-12 months. The outlook for M&A is promising in both volume and value, as there is continued compression in the supply chain and a blurring of the lines between the categories in the supply chain (e.g., delivery buying into data; enterprise software buying into analytics; content acquiring interactive services; etc.). JEGI expects more unlikely buyers creating previously unforeseen combinations to continue blurring these lines. Source:  JEGI Client Briefing October 2010

BIIA Newsletter November II – 2010 Issue