Blog Post

M&A In Q1: Deal Values Are Rising

The media investment banks Petsky Prunier and The Jordan, Edmiston Group, Inc. have issued their dueling M&A tallies for Q1 and disagree on whether the number of deals have risen (Petsky) or remained flat (JEGI). But the two firms do see eye-to-eye on the amount of money that was spent in the quarter that’s ending: valuations went up and are likely to continue on that direction throughout the year.

Petsky: M&A and funding activity across Marketing, Information and Digital Media/Commerce was up 50 percent in Q1. Collectively, deal value rose 21 percent, compared to the prior quarter. Specifically, Petsky tracked 626 deals valued at $24.4 billion covering Digital Advertising, Agency/Consulting, Marketing Technology, Digital Media/Commerce, Software & Information and Marketing Services. Digital Media/Commerce was the most active and highest value segment with 253 transactions worth $10.4 billion. Release (PDF)

JEGI: In its look at acquisitions and funding in the media space, JEGI said there was $12 billion spent in Q1, which counts as a 16 percent increase over 2010. Given the strength of the first quarter of 2010, when the pent up demand led to an 83 percent gain in deal volume and a nearly seven-fold increase in the amount of money being transacted over Q109 levels, it’s safe to say that this was a pretty healthy period. Release

The activity levels are likely to remain robust, JEGI said, though it did offer some caveats.

The uncertainty is related to the wider problems hanging over the rest of the economy, including the reluctance of banks to lend on smaller deals; the tepid recovery and lingering unemployment; unrest in the Middle East and the affect on oil prices.

On the bright side, liquidity is back in the debt markets. Considering that a lot of the activity both Petsky and JEGI have seen so far is largely being driven by “strategic buyers” like AOL (NYSE: AOL) and Google (NSDQ: GOOG), there’s an expectation that these kinds of buyers have not exhausted their interest or capacity to do more deals in Q2 and over the course of the summer.

One Response to “M&A In Q1: Deal Values Are Rising”

  1. Da Dutch

    The only question that matters here is what is the average revenue multiple on closed deals so far this year vs. last year. I am hearing 2x sales for most digital firms, especially those without unique technology. That isnt great in my book