Transcript Slide 1

The Merger & Acquisition Front:
How Aggressive Should We Be?
Moderated by:
James Watt
Chairman & CEO, Watt Publishing Group
The Merger & Acquisition Front:
How Aggressive Should We Be?
Cam Bishop
Doug Manoni
Peni Garber
Business Media
M&A Activities
Business Media
M&A Activity Increases
• The rate of business media acquisitions
has increased in the second half of 2004
and has continued in the first half of 2005.
• The increased activity was initially from
financial buyers, but strategic buyers are
becoming more active, particularly those
with a strong balance sheet.
Strategic Factors
To Consider on all
Acquisitions
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Growth Potential – Revenue and Margins
Competitive Position
Does it fill a gap with current products
Outside trends that could negatively
impact the future
Timing is Important
• Transaction multiples bottomed out in
2002 and have been rising in 2003, 2004,
and 2005. When is the best time to buy or
sell in this climate?
Watt Publishing Acquires
Chartwell Communications
in June 2003
• The acquisition played a significant role in
a substantial increase in both EBITDA and
pre-tax profit in 2004, and will play an
important part in the growth we envision
in the foreseeable future.
Trade Press Comments
• M&A forecast: Sunny [for now]
– Source: Berkery, Noyes
• Deals pace strengthens as mega deals
sprout.
– Source: Whitestone Communications
Trade Press Comments
• Media M&A activity increases in Q-1, 2004.
– Source: Jordan Edmiston
• The shear number of deals exceeds anything
we’ve seen, not just since the recession – but
all through the boom of the second half of
the 90’s.
– Source: DeSilva & Phillips
Trade Press Comments
• Conditions Right for Making Deals.
– Source: Media Business. Baran Rosen,
president of Whitestone Communications
was quoted as follows:
•“This is the best M&A environment the
industry has had since the economy
went south; all the key factors have
lined up”
Trade Press Comments
• There will be more deals over the next
twelve months, and they will be bigger.
– Source: AdMedia Partners
Trade Press Comments
• Acquisition Management – when the
deal is done, the hard part has just
begun. According to a report by
McKinsey & Co., an average of just 20%
of acquisitions made by publicly held
companies actually paid dividends for
shareholders.
– Source: Folio Magazine
The Merger & Acquisition Front:
How Aggressive Should We Be?
Cam Bishop
President & CEO, Acend Media Inc.
Acquisition Integration
IT’S
ABOUT
THE
PEOPLE
KEY STEPS
•Address the personal issues first
–Benefits
–Jobs
–Downsizing
–Organizational Structure
•Set expectations
–What will happen
–When it will happen
–Who is in charge/responsible
–Integration time cycle
KEY STEPS
•Communicate
–Fast
–Frequently
–In many ways
–Repeat
•Team Approach
–Your employees are affected too
–Involve and communicate with your team
–Encourage your team to talk with the
acquired team
LESSONS LEARNED
•This is hard work.
•Integration is another word for change.
•Listen.
•Ask questions. Listen some more.
•Collaborative approach
–Expect participation
–Solicit new manager buy-in
•“My way or the highway”
–Don’t assume your way is best.
–Don’t assume either way is now best.
•It’s about the people.
The Merger & Acquisition Front:
How Aggressive Should We Be?
Doug Manoni
President & CEO, Wicks Business
Information LLC
ACQUISITION
INTEGRATION
Acquisition Integration-Defined
in∙te∙gra∙tion (ĭn´tĭ-grā´shən) n. 1620
The act of forcing two different groups,
commonly opposed to each other, to unite
or battle until one [typically the seller]
wears down and the other [typically the
buyer] rises in triumph and moves on to
the next deal.
Acquisition IntegrationIntroduction
• Integration Planning and Implementation
are Equally as Important as Due Diligence
• Integration Planning Starts at the Onset
of Due Diligence
• Each Integration Plan should be Unique,
and Based on Various Criteria, including:
– The Operating Strategy for the Business
– Management Strengths of the Acquired
Business
– Competencies of the Acquiring Organization
Acquisition Integration-Process
• Appoint an Integration Team
• Learn the Business
• Develop a Detailed Integration Plan and
Timetable
• Implement Change Promptly
• Communicate Strategy and Market the
Strengths of the Combined Organization
• Monitor the Progress
Acquisition Integration-Common
Challenges & Misjudgments
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•
•
•
•
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Buyer’s Arrogance
Operating Fit
Reliance on Acquired Management
Geographic Proximity
Lack of Consultation and Communication
Imposed Culture
The Merger & Acquisition Front:
How Aggressive Should We Be?
Peni Garber
Partner, ABRY Partners, LLC
ABRY Partners
• 16 years of media focused investment experience
• $16 billion of leveraged investment transactions
• Capital for buyouts, growth, acquisitions,
recapitalizations
• Partner with excellent operators
– Commonwealth Business Media
– Cygnus Business Media
– Dolan Media
– Network Communications
– Penton Media
Media Sector Focus
• Broadcast Radio
• Direct Response Advertising
• Broadcast Television
• Information Services
• Business-to-business Media
• Movie Exhibition
• Cable and Satellite Television • Outdoor Advertising
• Publishing
• Communications Towers
• Consumer Promotions
• Trade Exhibitions
Target Companies
• High Barriers to Entry
– Government Licenses
– Information Databases
– Proprietary Copyrights
– High Customer Switching Costs
• Recurring Revenues
– Advertising
– Subscription
• Strong Cash Flow Margins
• Low Technology Risk
• Highly Experienced, Quality Management Teams
Business Plans
• Launch new publications
• Expand distribution
• Penetrate new class of advertisers/subscribers
• Improve Pricing
• Acquire In-Market Competitors and eliminate
duplicative expenses
• Leverage strong existing brands
Leverage Strong/Existing Brands
E-Media Revenue Sources
• Web advertising
• E-newsletter advertising
• Email list rental
• Webcasts
• Custom e-media
• Subscription sales
E-Media Revenue Growth
% Increase Year-Over-Year
+27%
+17%
+12%
2002
2003
2004
Exit Strategy
• Not reliant on expanding multiples
• Numerous potential buyers
– Financial
– Strategic
– Public
Choosing an Investing Partner
•
•
•
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Ability to make swift decisions
Provide creative structuring advice
Help companies seize opportunities
Introduce or create valuable industry
relationships
– Senior Executives
– Joint Ventures Partners
– Acquisition Targets
– Customers
– Financing Source
– Suppliers
ABRY Partners
The Merger & Acquisition Front:
How Aggressive Should We Be?
Q&A
Cam Bishop
Doug Manoni
Peni Garber