JEGI Reports Strong Uptick in M&A for Media and Entertainment Industry
(Press Release) New York, NY September 30, 2010 — The first three quarters of 2010 saw 651 M&A transactions worth $32.9 billion announced across the media, information, marketing services and technology sectors, as tracked by The Jordan, Edmiston Group, Inc. (JEGI), the leading independent investment bank specializing in mergers, acquisitions and divestitures across these core markets.
The number and value of M&A transactions in the first three quarters of 2010 increased 42% and 95%, respectively, over 2009 levels. The surge has been led by corporate buyers driving 86% of total transactions announced. These "strategic" buyers have unprecedented levels of cash on their balance sheets, with the S&P 1500 companies holding more than $1 trillion in liquid assets. Large cap companies in particular have increased their liquidity, with the S&P 500 increasing their holdings of liquid assets by 46% since 2008.
Smaller Deals Abound
Q3 saw a number of smaller M&A transactions, with only one deal over $1 billion in value—IBM's $1.7 billion acquisition of Netezza, a data analytics company, as IBM continues to build out its data, analytics and optimization platform. The next largest deals of the quarter were Walt Disney Company's acquisition of social gaming company Playdom for $763 million, Google's acquisition of ITA Software, travel search and booking technology, for $700 million, and Hellman & Friedman's acquisition of Internet Brands, an online content company, for $640 million. Overall, the average deal size for M&A transactions in the first three quarters of 2010 was $51 million, compared to $120 million in 2007.
Activity Led by Innovative Emerging Companies
Emerging companies in the digital, marketing services, and mobile sectors accounted for 73% of total deal activity in 2010YTD, and the number of deals grew 73% over 2009 levels. The nascent Mobile Media & Technology market in particular saw a 148% increase in number of transactions announced The number of deals in all other sectors covered by JEGI fell by ‐4% in 2010 YTD. These emerging companies have been trading earlier in their life cycles at lower valuations, with an average transaction size in the digital, marketing services, and mobile sectors of $33 million in the first three quarters of 2010, compared to nearly $100 million in the balance of the media and information sectors covered by JEGI.