JEGI Reports Strong Uptick in M&A for Media and Entertainment Industry
This is truly a difficult economic environment in which to make predictions. The news bounces back and forth between positive and negative—strong corporate earnings reports are offset by flat retail sales; one day the debt market seems to be easing, and the next, banks are still jittery. Private equity firms have a significant amount of liquidity, with a $418 billion capital overhang, according to Pitchbook. However, banks must start lending on smaller transactions (those below $10 million in EBITDA) to increase the level of M&A deal‐making among PE buyers.
In the middle‐market, JEGI expects continued strong activity across the firm's core sectors, as strategic companies continue to put their capital to work to acquire transformative business models and position their companies for growth. Interactive and mobile assets will continue to have a strong following, as high growth businesses with innovative models. Many PE portfolio companies that were acquired during the major buying cycle of the early and mid 2000's are primed for divestiture and should come to market over the next year.
The largest cloud over the M&A environment is the uncertainty over the path of the economy during the next six to twelve months, and the consequent unwillingness of banks to loosen lending restrictions. Following bankruptcies and restructurings, banks have become owners of former PE platform companies. Coupled with their overall hesitancy to invest in new media and technology assets, the banks are not yet prepared to resume supporting the M&A activities of private equity firms.
JEGI Activity Continues
JEGI recently announced four more noteworthy transactions: the sale of Forbes' Investopedia, an online provider of financial information and investing education, to ValueClick for $42 million; the sale of Rigzone, a provider of data, information, and career services for the oil and gas industry, to Dice for $39 million plus an earn‐out; the sale of Accela Communications, interactive video communications, to KIT Digital; and the sale of mSnap, a mobile ad network, to Marketron. JEGI has a robust and active pipeline of deal activity and expects to close several notable transactions in Q4.