Report: M&A Market Hits $21B, Deal Values Up 291%
- by Gavin O'Malley @mp_gavin, June 30, 2010
Led by digital and tech-driven businesses, the M&A market for media, information, marketing services, education and related technologies rebounded strongly in the first half of the year, according to a new analysis from Jordan, Edmiston Group.
During the period, 445 transactions -- with a total value of $21 billion -- were announced, reflecting a 52% increase in deal volume over the same period last year, and a 291% surge in deal value.
The sharp rise in market deal value was driven by several multibillion-dollar transactions, including Madison Dearborn Partners' acquisition of credit and information management company TransUnion for an estimated $2.5 billion, and the acquisition by Silver Lake Partners and Warburg Pincus of financial information provider Interactive Data Corporation for $3.2 billion.
Overall, six market sectors saw strong growth in M&A in the first half, including B2B online media; B2C online media, which was up 64%; B2B Media; database and information services; marketing and interactive services, which was up 96%; and mobile media and technology, which was up 188%.
Interactive media, marketing services and digital and mobile technology continue to propel deal flow, as the B2B and B2C online media and technology, marketing and interactive services, and mobile media and technology sectors accounted for 74% of total deal activity in the first half of 2010.
Large interactive, marketing services and technology companies continued to be active acquirers, including Acxiom, Akamai, Alliance Data Systems, Apple, Facebook, Google, GSI Commerce, IAC, IBM, InfoSpace, Interpublic, Juniper Networks, Oracle, Publicis Groupe, Salesforce.com, Twitter, WPP, Yahoo, and Zynga.
The largest deals announced by this group in the second quarter included IBM's acquisition of Coremetrics, the Web analytics and digital marketing optimization company, for an estimated $150 million; Salesforce.com's acquisition of Jigsaw Data Corp., an online business contact database, for $142 million; Alliance Data System's acquisition of Equifax's Direct Marketing Services division for $117 million; and Yahoo's acquisition of online content publisher Associated Content for a reported $90 million.
Yet average deal sizes for the interactive markets remained relatively small, averaging $23 million versus an average deal size of $47 million for the overall media marketplace.
With interactive marketing spending in the U.S. estimated to reach nearly $30 billion in 2010, according to Forrester Research, media companies are seeking to incorporate more interactive marketing services into their product offerings, to more deeply service brands and advertisers.
CBS, News Corp., Nielsen, Time Warner, and United Business Media all made acquisitions in the interactive, marketing services and technology markets in the second quarter of 2010.
Hearst's acquisition of iCrossing reflected broader efforts by diversified media companies to augment display advertising sales with a complementary presence in interactive marketing services, while JEGI anticipates similar transactions going forward, as other media groups tap into higher growth services.
This is actually good news. Investment sizes and deal sizes were so ludicrously over-inflated for so many years that it's about time that the business cycle started to push back and bring this back to earth. The silly valuations high multiples for a huge cross section of transactions were not valid; we saw it, knew it, know it, and now it's part of the overall calculation. While this could cause necessary and painful contraction for certain parts of the capital services market, it begins to enforce realistic valuations. With realistic valuations, we can expect more realistic approaches to funding, for more realistic ventures, etc. More people likely get more real businesses funded ... less hype, less BS.