Despite a recent industry-wide dip in advertising revenue, it seems that buyout professionals are still bullish on media publishing and exposition properties. In fact, private equity firms conducted approximately 20% of the $6.2 billion spent on third quarter mergers and acquisitions activity within the sector.
And while that number is a dip from 28% of Q2 totals – according to a recent report by The Jordan, Edmiston Group – the momentum is on the side of buyouts funds for the upcoming year as current owners look to sell out better-funded competitors.
Topping the list for largest Q3 transactions within the publishing and exposition sector was DLJ Merchant Banking Partners’ $900 million purchase of Advanstar Communications, which was sold by San Francisco-based Hellman & Friedman.
The Boston-based company publishes 103 business publications, produces 101 tradeshows and provides marketing services to businesses in 19 industries. It generated sales of approximately $328 million last year, which is a threefold increase from when Hellman & Friedman purchased the company four years ago for $237 million.
DLJ is expected to increase the pace of Advanstar’s acquisitions, which have slowed in the past year after its IPO was abandoned and Hellman & Friedman put the company on the block.
The DLJ deal came on the heels of financial buyer Abry Partners’ purchase of Cygnus Business Media for $275 million, marking the largest media buyout in the second quarter.
Other third quarter buyout deals included: The Riverside Co.’s September $20 million acquisition of Moss, a designer and manufacturer of exhibit displays; Veronis Suhler & Associates’ purchase of Builderburg Group, which includes Journal of Light Construction and the trade show JLC Live!, through its platform company Hanley-Wood.
Thus far, Q4 has also shown a significant amount of sector activity on the part of private equity firms.
Veronis Suhler & Associates’ October agreement to acquire Phillips Business Information for approximately $100 million is the largest transaction or potential transaction to date this quarter. Phillips Business Information participates in magazine publishing, business information services, conferences and trade shows. It will serve as a platform for add-on acquisitions and consolidation in the industry.
VS&A stands behind a theory that there is plenty of opportunity for consolidation in this area, said Jeffrey Stevenson, president and managing general partner of the firm, which owns at least a dozen trade publications and operates several media platforms.
In October the firm also acquired three properties through its Cannon Communications portfolio company. The transaction gave the company full ownership of Nutritional Outlook magazine, the Nutritionals Symposium and Exhibition and Cosmetic/Personal Care Packaging Magazine.
The Jordan, Edmiston Group report also concurs with Stevenson’s consolidation hypothesis.
In fact, Richard DW Mead, a managing director at the group, said further consolidation is inevitable as trade publishers continue efforts to diversify from a single revenue source by expanding into expositions, conferences, databases and online properties. Furthermore, entrepreneurs are increasingly expected to look for ways to exit their businesses rather than face the prospect of making substantial investments in online and trade show properties in order to stay competitive and provide advertisers and marketers with full-service media concerns, according to the Jordan, Edmiston report.