M&A for Media and Marketing Services Expected to Increase in 2010 Says AdMedia Partners Survey of Industry Executives

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Digital Marketing Services and Online Media expected to have highest valuation multiples - buyers faced with a wide array of acquisition opportunities

Furthermore, 50% in marketing services and 48% in media anticipate M&A by financial buyers will be up in 2010, versus 14% and 6%, respectively, last year.

AdMedia Partners, a leading M&A advisory firm serving media, marketing services and information businesses, today announced the findings of its annual M&A market survey of top U.S. and international industry executives and investors. This year, AdMedia combined its previously separate media and marketing services surveys to reflect the convergence of these industries. To access a free copy of the report, click here.

"Highlighting positive expectations for the coming year it was impressive to see that 83% of marketing services respondents anticipate strategic buyers will increase their M&A activity this year, up from just 31% in 2009. 80% of media respondents expect such an increase in 2010, up from 26% last year," said Seth Alpert, a Managing Director of AdMedia Partners. "Furthermore, 50% in marketing services and 48% in media anticipate M&A by financial buyers will be up in 2010, versus 14% and 6%, respectively, last year."

Key themes that emerge from this year's survey include:

  • M&A activity is expected to rebound as buyers are faced with a wide array of acquisition opportunities and look to use excess cash.
  • Differing views of executives shows more optimism in marketing services than media, perhaps a reflection of digital media's continuing disruption of the industry.
  • Evolving mobile and social media/marketing offerings are considered to be important growth opportunities in 2010.
  • Potential capital gains tax increase may be a catalyst for sellers to go to market in 2010.

Key findings related to digital marketing services:
The range of multiples respondents consider reasonable for digital marketing and digital marketing technology companies increased to 7-8x EBIT, versus 6-7x last year, and the range for marketing services companies increased to 6-6.5x EBIT from 5x last year. Traditional ad agency multiples stayed constant at 5x.

Key findings related to the media sector:
Valuation expectations for the media sector were much less bullish than in the marketing services sector. Multiples in the media sector were down from last year, ranging from 8-9x EBITDA for online media to 3x EBITDA for newspapers.

More conservative M&A views coming from the media sector may be a function of the continued disruption of digital media: while consumers are clearly moving their content usage online, it remains unclear how to profit from this trend. Only 20% of respondents believe online content companies have developed a sustainable business model, down from 30% in 2009. Opinions on the perceived relative valuations of most media sectors varied greatly. For example, 41% of respondents think online media is overvalued and 24% think it is undervalued. In addition 29% said newspapers are overvalued, while 42% said newspapers were undervalued.

To access a free copy of the 2010 M&A market survey, visit the AdMedia Partners website at http://admediapartners.com/

About AdMedia Partners
AdMedia Partners is a leading M&A advisor that provides middle market mergers and acquisitions advisory services to digital and traditional media, marketing and information businesses. Founded in 1990 and located in New York City, our firm has completed over 175 transactions worth over $7 billion since 1999.

Greg Jarboe

Seth Alpert
AdMedia Partners


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