M&A Edges Up in 2011, Driven By Marketing and Interactive Services

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Media, information, marketing services and technology saw nearly 900 transactions in 2011 totaling $47 billion, a 9% increase over 2010, according to The Jordan, Edmiston Group, the leading independent investment bank for these core markets. With the S&P 500 Index flat for the year and turmoil in global markets, this growth demonstrated the resilience and attractiveness of these sectors to corporate and financial buyers. The largest deal of the year was eBay’s acquisition of GSI Commerce for $2.4 billion. B2B Online Media & Technology, Marketing & Interactive Services, and Database & Information each saw three deals in the top 10.

The media, information, marketing services and technology sectors saw nearly 900 transactions in 2011 that totaled $47 billion, a 9% rise over 2010, according to The Jordan, Edmiston Group, Inc. (JEGI) (http://www.jegi.com), the leading independent investment bank specializing in M&A advisory across these core markets. With the S&P 500 index flat for the year and turmoil in global markets, this growth demonstrated the resilience and attractiveness of these sectors to corporate and financial buyers, as media, marketing and information rapidly evolve and become increasingly intertwined. Driven in large part by technology, Marketing & Interactive Services continues to be the main driver of growth for M&A, accounting for a third of transaction volume in 2011 and 32% of deal value.

Overall, the interactive markets, including B2B and B2C Online Media & Technology and Mobile Media & Technology, as well as Marketing & Interactive Services, accounted for 71% of M&A deal activity for the year and 65% of value. Two of the more “traditional” media sectors also saw sharp year-over-year growth in M&A activity and deal value – Consumer Magazines (up 23% in number of deals and nearly 15x in deal value) and Exhibitions & Conference (up 39% and 249%).

Largest Deals of 2011

Looking at the largest deals of 2011 (32 transactions with $400+ million of value), the Consumer Magazine market accounted for four of these transactions and benefited from a sharp increase in investment from both strategic companies and private equity firms. The largest consumer magazine transaction, which cracked the top 10 largest deals of the year, was Apax Partners’ buyout of Trader Corporation from Yellow Media for $745 million in March. Just outside the top 10 were Hearst Corporation’s acquisition of Lagardère’s international magazine group for $651 million in February and Axel Springer’s acquisition of WAZ Media Group for $613 million in October.

The Exhibitions & Conferences market did not appear among the largest deals for 2011, but it did see a transaction during the year that is significant for this market – Providence Equity Partners’ acquisition of George Little Management from Daily Mail & General Trust for $180 million in September (JEGI represented DMGT in this transaction).

The Marketing & Interactive Services and Database & Information Services sectors accounted for 17 of the 32 transactions on the top deals list for 2011. Marketing & Interactive Services saw investments across a range of services, from customer experience marketing to real-time analytics to retail marketing insights. Financial information dominated the Database & Information Services sector, accounting for six of the eight largest information transactions for the year.

B2B Online Media & Technology and Healthcare Information & Technology each saw three transactions make the list for 2011. The B2C Online Media & Technology and Education Information, Technology & Training sectors were each represented by two transactions on the list. The Mobile Media & Technology sector saw one deal on the largest deal list for 2011 – DeNA’s acquisition of mobile gaming company ngmoco for $400 million in May. The mobile market is still fairly nascent, and mobile deal values increased 37% in 2011 over 2010.

Top 10 Deals of 2011

For 2011, the top 10 deals comprised three transactions from each of the following sectors – B2B Online Media & Technology; Marketing & Interactive Services; and Database & Information Services, along with the Consumer Magazine deal noted above. The largest deal was eBay’s acquisition of GSI Commerce for $2.4 billion in March. Oracle entered the top 10 with two $1+ billion acquisitions in October in marketing services and technology – RightNow Technologies and Endeca Technologies.
Private equity buyers accounted for three of the top 10 deals, including the buyout of Go Daddy Group by Kohlberg Kravis Roberts (KKR), Silver Lake Partners and Technology Crossover Ventures (TCV) for $2.25 billion and New Mountain Capital’s acquisition of SymphonyIRI for $800 million, along with the Apax Partners’ deal mentioned above. Rounding out the top 10 were three deals in the information market – Bloomberg’s acquisition of Bureau of National Affairs for $992 million in August; CoStar Group’s acquisition of LoopNet for $860 million in April; and LSE’s acquisition of FTSE International for $703 million in December – along with Web.com’s acquisition of Network Solutions for $756 million in August.

A Mix of Buyers

Of the 32 largest deals for 2011, eight (or 25%) were led by private equity buyers, with the balance being driven by strategic company acquirers. Repeat buyers during the year included Oracle, as mentioned above, as well as two private equity firms – KKR and New Mountain Capital. Along with the buyout of Go Daddy Group as part of a consortium, KKR acquired Ipreo Holdings from Veronis Suhler Stevenson (VSS) for $425 million in May. New Mountain Capital acquired SNL Financial for $405 million in August, following its buyout of SymphonyIRI in June.

JEGI Activity Continues

JEGI closed two significant transactions in Q4 of 2011, bringing the year’s total to 15 (JEGI represented the seller in each deal):

  • Sale of Travidia, a developer of online shopping solutions for local media, to a consortium of eight leading media companies – Advance Digital, A. H. Belo Corporation, Cox Media Group, Gannett Co., Hearst Corporation, MediaNews Group, The McClatchy Company, and The Washington Post Co.; and
  • Sale of The Retail Equation, a leading SaaS platform for retail transaction optimization solutions, to Norwest Venture Partners, a global venture capital firm celebrating 50 years in the venture industry.

Looking Ahead

The media and technology markets continue to evolve at a torrid pace, and companies are increasingly seeking assets to drive growth and provide new revenue streams. JEGI expects that a diverse and active pool of buyers, including both strategic companies and private equity firms, both of which have access to capital and will benefit from a steadily improving debt financing market, will drive vigorous M&A activity in the year ahead. JEGI’s active pipeline of new deal opportunities also suggests that M&A will continue at a healthy pace across its core markets through the first half of 2012.

M&A Highlights for 2011

  •     Deal value for the b2b online media and technology sector spiked 132% for the year on 63 announced deals in 2011, driven by several multi-billion deals including eBay’s acquisition of GSI Commerce for $2.4 billion in Q1 and the $2.25 billion buyout of Go Daddy in Q3 by KKR, Silver Lake, and TCV. In Q4, notable deals included Rimage’s acquisition of Qumu, online video communications technology, for $53 million; Inuvo’s acquisition of Vertro, software for Web browser updates; Google’s acquisition of Apture, transforms web pages into multi dimensional channels; and Say Media’s acquisition of ReadWriteWeb, a technology news and information site.
  •     B2c online media and technology was the second most active sector for M&A in 2011, with 214 transactions at a total value of $7.6 billion. However, the number of deals and value dipped slightly (by 7% and 10%, respectively) versus 2010 levels. Q4 saw two significant e-commerce transactions – Rakuten’s acquisition of Kobo, an online retailer of books, magazines, and newspapers, for $315 million; and Bridgepoint Capital Group’s acquisition of ISIS Equity Partners’ Wiggle, an online retailer for the cycling and tri-sports markets, for $314 million. Other notable deals in the quarter included Vistaprint’s acquisition of Albumprinter, which enables consumers to work with their digital images, for $91 million; eBay’s acquisition of Hunch, an online recommendation engine, for $80 million; Microsoft’s acquisition of VideoSurf, online video search, for $70 million; Disney’s acquisition of Babble Media, a blogging platform for moms, for $42 million; and a consortium of eight leading media companies’ acquisition of Travidia, a developer of online shopping solutions for local media.
  •     M&A activity for the business-to-business media sector was nearly non-existent in 2011, with only 14 deals for the year at a total value of $50 million. Q4 saw three b2b media deals: Centaur Media sold its Recruiter Portfolio, a b2b media platform for the recruiting market, to Redactive Publishing; Penton Media sold Paper, Film & Foil Converter, a trade publication serving the package printing industry, to YTC Media; and KAP Media sold security related b2b media properties to Annex Business Media.
  •     The consumer magazines sector saw a number of larger transactions in 2011, including Axel Springer’s acquisition of WAZ Media Group for $613 million in Q4. For the year, the number of deals and value for the sector increased 23% and nearly 15x, respectively, over 2010 levels. Other notable Q4 deals included a $38 million investment in Martha Stewart Living Omnimedia by J.C. Penney; Hearst Corporation’s acquisition of Hachette China, the regional publishing operation owned by Hachette Filipacchi Medias Group; and Meredith’s acquisition of Everyday with Rachel Ray from Reader’s Digest. The most intriguing deal of the quarter was the acquisition of Carus Publishing, a publisher of educational magazines and books, by ePals, a social online learning network. The transaction provides ePals with a deep pool of high-quality content and 300,000+ subscribers, as the company looks to build an integrated education media company.
  •     The database and information services sector saw a sharp decline in the number of deals announced (down 38%) and deal value (down 49%) in 2011 versus 2010. Still, the sector accounted for more than $6 billion of announced transactions in 2011, including the London Stock Exchange’s acquisition of FTSE International, a provider of financial information, for $703 million in Q4. Other notable Q4 deals included Moody’s Corporation’s acquisition of Goldman Sachs’ Barrie & Hibert, a provider of risk management tools, for $78.5 million and Halyard Capital’s acquisition of Tranzact’s Information Services division from Veronis Suhler Stevenson for an estimated $40 million.
  •     The education information, technology and training sector saw 59 transactions announced at a total value of nearly $3 billion in 2011, representing flat year-over-year deal volume, with a 42% decline in deal value versus 2010. In Q4, Pearson continued to be active, acquiring Global Education and Technology Group, a provider of education courses and services in China, for $148 million and TQ Education & Training, which offers vocational and technical education and training services. Sanoma acquired two Scandinavia-based educational publishers in Q4 – Tammi Learning and Bonnier Utbildning. Other notable deals in the quarter included SkillSoft’s acquisition of Element K, the e-learning solutions provider, from NIIT, for $110 million and MidOcean Partners’ acquisition of Global Knowledge, a provider of business training, from Welsh, Carson, Anderson & Stowe.
  •     The exhibitions and conferences sector saw increased activity in Q4 that lifted the number of deals for the year to 32 (from 18 transactions through Q3), driving a 39% increase in M&A activity for the year over 2010 levels. Deal value for the sector nearly quadrupled in 2011, to a total of $451 million, led by Providence Equity Partners’ $180 million buyout of George Little Management, the US trade show platform of Daily Mail & General Trust, in Q3. Q4 was dominated by strategic company acquirers, including United Business Media, which made two acquisitions in the quarter – Index Furniture Private, a producer of furniture and interiors exhibition in India, and Online Marketing Summit, an annual tradeshow for the online marketing industry in the US. Large, global exhibition company organizers Bonnier, Diversified Business Communications, Pennwell, and Reed Elsevier were also active acquirers in the quarter.
  •     In 2011, healthcare information and technology was the third most active sector for M&A, with 77 transactions for the year, representing a 48% increase over 2010 levels. Deal value more than doubled in 2011 over 2010, to nearly $3.7 billion. In Q4, there were several larger deals of note, including HMS Holdings’ acquisition of HealthDataInsights, a technology-enabled healthcare services company, for $400 million and SXC Health Solutions’ acquisition of HealthTran, a provider of healthcare management products and services, from ABRY Partners, for $250 million. Other notable deals in the quarter included Springer Science’s acquisition of Wolters Kluwer’s MPS, which offers strategic marketing and business intelligence products and services for the pharmaceutical industry; MDC Partners’ acquisition of Concentric Pharma Advertising, a healthcare agency; Veronis Suhler Stevenson’s Remedy Health Media’s acquisition of HealthCentral, the online clinical and patient tools, community and content provider; and Cello Group’s acquisition of MedErgy, a healthcare communications consulting company, from Lake Capital and Frontenac Company private equity firms.
  • The marketing and interactive services sector continues to lead in M&A volume with 291 transactions announced at a total value of $15.1 billion in 2011, up 17% and 33%, respectively, over 2010. Q4 saw a number of notable transactions, including
  • Oracle’s acquisition of RightNow Technologies, customer experience software products and services, for $1.5 billion;
  • Oracle’s acquisition of Endeca Technologies, enterprise search, for $1.1 billion;
  • Neustar’s acquisition of TARGUSInfo, telephone-centric information and analytics, from TA Associates, for $650 million;
  • IBM’s acquisition of DemandTec, grocery merchandising software, for $449 million;
  • Adobe’s acquisition of Efficient Frontier, online performance marketing management, for $400 million;

•Yahoo’s acquisition of interCLICK, online ad network, for $251 million;

  • Adobe’s acquisition of Auditude, video ad management and monetization, for $120 million;
  • Vistaprint’s acquisition of Webs, web site creation templates and tools, for $117 million;
  • SuccessFactors’ acquisition of Jobs2Web, interactive recruitment marketing, from Updata Partners, for $110 million;
  • SDL’s acquisition of Alterian, marketing and customer insight technologies, for $104 million;
  • Federated Media Publishing’s acquisition of Lijit Networks, online advertising analytics and tools, for approximately $100 million;
  • Vitruvian’s acquisition of College Group, a high-end UK-based PR firm, for $69 million; and
  • Norwest Venture Partners’ acquisition of The Retail Equation, retail transaction optimization solutions (price not disclosed).
  • Even though deal activity declined 6% in 2011 versus 2010, deal value for the mobile media and technology sector increased 37% year-over-year, to $2 billion, driven by DeNA’s acquisition of ngmoco, a mobile game developer, for $400 million in Q2 and eBay’s acquisition of Zong, technology that enables users to purchase virtual goods with their mobile phones, for $240 million in Q3. In Q4, Keynote Systems acquired Mobile Complete, a technology for testing and monitoring mobile web sites and apps, for $85.5 million and Lenco acquired iLoop Mobile, a developer of mobile ad platforms, for $42 million. Other notable deals in the quarter included three acquisitions by Facebook – Gowalla, Friend.ly and Digital Staircase; two acquisitions by Location Labs – Wirkle and Volly; Google’s acquisition of Clever Sense; Wal-Mart Labs’ acquisition of Grabble; and Twitter’s acquisition of Whisper Systems.

About JEGI
The Jordan, Edmiston Group, Inc. (JEGI) of New York, NY is the leading independent investment bank for the media, information, marketing services and technology sectors. Since 1987, JEGI has completed more than 500 high-profile M&A transactions for global corporations; middle-market and emerging companies; entrepreneurs; families; and private equity and venture capital firms. For more information, visit http://www.jegi.com.

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Adam Gross
The Jordan, Edmiston Group, Inc.
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