...Industry statistics show clearly the drop-off of M&A activity from 2000 through 2003. M&A advisory firm Whitestone Communications, Inc., which publishes quarterly reports on M&A activity in various media, reported that newsletter company acquisition activity finished 2003 at about the same level as 2002.
Whitestone Communications Associate Jenifer Lindenman said the pace of deals picked up in 2003's fourth quarter and that they see signs of expanded activity for 204. She said six deals were completed in the fourth quarter of 2003, double the number for the same quarter in 2002.
A Whitestone press release said another indication of increased M&A interest is the 13.2 times operating profit multiple the Informa Group of the U.K. paid for PJB Publications in a $210.5 million deal, the largest newsletter acquisition transaction in recent years.
Whitestone President Baran Rosen said that in the "boom" times of newsletter industry deals in the late1990's, banks were often willing to loan up to 5.5 times cash flow. Lately, that number has dipped to 3-3.5 times cash flow, he said, forcing buyers to have to put a lot more of the capital for an acquisition. As the economy improves, he said, banks should start moving bank towards that higher number.
This article is reprinted with permission from Hotline. Copyright January 20, 2004.
