A recent publishing/magazine industry valuation model update
For 3Q M&As, Cashflow Multiples Hold Steady at 11
A report on third-quarter magazine deals released last week states that average cashflow multiples are essentially holding firm at 10.9, while average M&A revenue multiples are down slightly at 3.2.
According to The Jordan, Edmiston Group, a New York investment banking firm that tracks multiples from the previous 12 months of M&A deals to find the current average, the second-quarter saw a median EBITDA multiple of 11, while the revenue multiple was 3.4.
But while cashflow multiples are staying put, the overall pace of M&A deals has slowed from a year ago. According to JEGI, the magazine publishing and exposition industry together saw 42 deals in the third quarter, while the same period a year ago saw 51.
Thanks in large part to Cond‚ Nast Publications Inc.'s deal to buy Walt Disney Co.'s Fairchild Publications for $650 million, however, the total value of this year's third-quarter M&A deals more than doubled the value of last year's third-quarter deals. JEGI estimated that 1999's third-quarter deals were worth a combined $1.7 billion, while 1998's were worth $673 million. In fact, JEGI estimates that the value of 1999's third-quarter deals was nearly equal to that of the first half's-in which 85 deals were worth a combined $1.8 billion.
In its quarterly tally, JEGI said the decline in the number of third- quarter deals this year was due primarily to rising interest rates, softening b-to-b ad pages "and some high-profile failed or delayed auctions for companies like Ziff-Davis Inc., Medical World Communications and Adams Business Media."
And yet, the investment banking firm added, the declining M&A deal number belies the fact that the number of trade show and conference deals has grown steadily since 1995, rising from 15 to 48 deals last year. Already, 1999 has broken last year's record for exposition industry deals, having scored 48 in the first nine months.
JEGI attributed this growth to b-to-b publishers attempting to dominate vertical markets by owning everything from the leading title to the related trade show, newsletter, database and Internet community. "This strategy places a great emphasis on building core clusters of media properties around the markets they serve," JEGI stated.
Meanwhile, the firm also noted that unlike some of its fellow New York investment banking firms-such as Whitestone Communications, which earlier this month released its own third-quarter M&A tally-it does not believe that Internet companies will be snapping up print publishers in the months to come.
Pointing specifically to iVillage Inc.'s $86 million acquisition of Lamaze Publishing Company Inc. last August, JEGI stated that it "is not indicative of a scenario in which stock-inflated, cash-rich, content-starved dot.com companies come calling on publishers in large numbers and offer to pay them generous multiples." |
