City and Regional Mags Still a Seller’s Market
Mergers and acquisitions activity remains lively throughout the media and information industry. The market maintained its brisk pace through the first quarter of 2007 according to the Jordan, Edmiston Group Inc., which reported 207 transactions valued at nearly $13 billion. Thirty-one of these transactions through March were in consumer and business-to-business magazines, six more than 2006’s first quarter. These magazine transactions resulted in about $1.5 billion, a significant increase over the categories’ $229 million through March of last year. The city and regional publishing segment was perhaps among the most active, suggests Kim Mac Leod, president of Norwalk, Conn.-based Regional Media Advisors, which is dedicated to the regional market. Publishing Executive sought Mac Leod’s advice to help city and regional magazine owners looking to buy or sell in today’s busy market.
What is the current M&A climate of the city and regional market?
Kim Mac Leod: [It] is still strong and still a seller’s market for a couple of reasons. First, the relatively low cost of money (at least for the time being) has made cash available to buyers, both strategic and financial, at better terms. … Second, there is more demand than supply right now. There are numbers of buyers—particularly private equity-backed buyers who need to put their investors’ money to work—who have recognized over the past seven to eight years that media is a good business in which to invest, and have been actively buying city and regional magazines.
What should a potential seller look for in an adviser?
Mac Leod: Have they have done transactions with … and do they understand the metrics of a city or regional publication and how it differs dramatically from a national publication? Do they understand how to position it … to the various buyers—both strategic and financial—that will fully realize the value that the seller will get and, if needed, help the seller get ready to sell (fixing problems ahead of time), so that hiccups don’t occur once the company is on the market that can cause buyers to walk away? This happens more often than you realize, and a good adviser should be able to see these flaws ahead of time.