outsell leadership council - jegi...m&a outlook – 2015 outsell leadership council 12 valuation...

M&A Outlook

presented by

Wilma Jordan, Chief Executive OfficerThe Jordan, Edmiston Group, Inc.

February 12, 2015

OUTSELL LEADERSHIP COUNCIL

2M&A Outlook – 2015 Outsell Leadership Council

Discussion Agenda

1. M&A Climate

2. M&A Activity and Valuations

3. Predictions


M&A Climate

Key M&A drivers• Record levels of corporate cash• Strong public equity and IPO markets• Debt markets wide open; mirroring 2007 levels• Larger transactions pushing up avg values• Fierce competition around marketing stack

Strategic buyers continue to drive market• Seeking growth via acquisitions• Looking to expand footprint and wallet share• Retooling models to leverage technology and

new platforms/channels

PE drives competition and liquidity• Race to invest $1+ trillion of “dry powder”• Continuing to acquire new platforms and add-

ons for existing portfolio companies• Many early stage groups moving up to growth

equity and recap

M&A volume and value increased in 2014 vs. 2013, driven by larger transactions in Marketing & Mobile


US Consumer Confidence Index rose sharply in January 2015, up to 102.9, the highest level since August 2007

Stock market performance on the rise: the Dow Jones Industrial Average (DJI) closed at 17,983 on December 31, 2014, a 55% gain over the closing value of 11,578 on December 31, 2010

2014 US Congressional elections were favorable for businesses

Technology evolution is driving M&A for legacy companies in all sectors

Companies have cash on the balance sheet, interest rates are low, and the debt markets are advantageous for borrowers

Cash and confidence creates strong M&A environment

M&A Climate


“M&A market regains pre-crisis health…”

“The M&A market took a long time to come back after the financial

crisis brought many companies’ deal ambitions to a halt. Even though

several of the present financial ingredients have been in place for a

while—like a strong equity market and cheap debt—it wasn’t until

[2014] that companies began taking advantage of them in earnest.”

“With stocks coming back and deal making continuing unabated, the

outlook for M&A is as good as it was before, if not better…”

WSJ Quotes on M&A Climate


Discussion Agenda

1. M&A Climate


3. Predictions


M&A Volume and Value by Sector

Industry SectorNo. of Deals

Value (millions)

No. of Deals

Value (millions)

No. of Deals

Value

B2B Online Media & Technology 57 $601 65 $2,898 14% 382%

B2C Online Media & Technology 219 $6,197 175 $15,014 (20%) 142%

Business‐to‐Business Media 34 $452 38 $3,156 12% 598%

Consumer Magazines 37 $1,703 31 $1,603 (16%) (6%)

Database & Information Services 69 $6,029 70 $6,938 1% 15%

Education Information, Technology & Training 81 $6,954 72 $5,354 (11%) (23%)

Exhibitions & Conferences 64 $3,751 53 $1,106 (17%) (71%)

Healthcare Information & Technology 209 $10,458 234 $27,866 12% 166%

Marketing Services & Technology 478 $23,203 602 $39,716 26% 71%

Mobile Media & Technology 145 $7,398 141 $24,681 (3%) 234%

Total 1,393 $66,747 1,481 $128,331 6% 92%

Source: JEGI Transaction Database

Media, Information, Marketing & Technology M&A Activity

20142013

January ‐ DecemberJanuary ‐ December % Change


Middle market PE M&A activity back at pre-crisis levels

PE Activity

Middle Market Deal Flow by Year


Middle market PE M&A transactions include robust amount of debt

PE Activity

Middle Market Median Debt %

Source: PitchBook


Middle market PE M&A multiples surpass pre-crisis levels

PE Multiples

Source: PitchBook

Middle Market Median EBITDA Multiples


Valuation Drivers

Agency & Research

Services and B2B Media

Diversified B2B Media,

Conferences and

BPO/KPO

Tradeshows and

Interactive/ Technology

Enabled Marketing Services

Research, Consulting &

Bench-marking Services

Valuations increase with strong technology component and recurring revenue (subscription) models

Syndicated Marketing and Data and B2B

Information/ Workflow Solutions

6-7x

12+x


Strong cash flow and margins

Sustainable competitive advantage

Experienced and highly regarded leadership team

Diverse customer base with no one customer accounting for 20+% of revenue

High growth rates and scale

Competitive auction process with “out of the box” buyers

Other key attributes that drive higher valuations

M&A Valuations


Case Study – Out of the Box Buyer

Finding a Unique Buyer to Create Workflow Efficiencies

acquires

Target Overview: leading provider of software and data to the agriculture market

Acquisition Rationale: create a unified workflow system to connect equipment dealers and farmers for better collaboration and to improve real-time decision making

Insider View: “With the acquisition of IRON Solutions, Trimble is empowering our dealers with trusted technologies that employ best-in-class information, next generation enterprise services and market analytics. The IRON Solutions information together with Connected Farm will provide growers with a critical element in understanding their equipment lifecycle, enabling them to more efficiently manage their fleets.”

Joe Denniston, VP Agriculture, Trimble

Deal Size: $50+ million including earn-outs


Case Study – Strong Recurring Revenue and Data Assets

Capitalizing on Strong Market Intelligence and Client Base

acquires

Target Overview: provides data, analytics, news and intelligence to construction professionals

Acquisition Rationale: enabling construction industry participants to conduct key commercial operations, including targeting and prioritizing prospects, sizing markets, targeting and building relationships, strengthening market positions, optimizing sales strategies, etc.

Insider View: “We are very excited for this opportunity to acquire the recognized leader in pre-bid and bid-stage construction data and analytics. We look forward to helping the business achieve the next level of success by continuing to deliver mission critical data and industry news while enhancing analytics and tools to better serve construction professionals.”

Bill Chisholm, Managing Director, Symphony Technology Group

Deal Size: $320 million


Case Study – Strong Technology and High Growth

Combining Data and Technology Capabilities to Enhance Product Offerings

acquires

Target Overview: connects offline consumer spending to digital marketing in order to help marketers increase the effectiveness and measurability of their advertising

Acquisition Rationale: the new offering will allow brands to personalize and measure every consumer interaction and maximize the value of their digital marketing

Insider View: “The addition of Datalogix to the Oracle Data Cloud will provide data-driven marketers with the most valuable targeting and measurement solution available. Oracle will now deliver comprehensive consumer profiles based on connected identities that will power personalization across digital, mobile, offline and TV.”

Omar Tawakol, Group VP & GM, Oracle Data Cloud

Deal Size: $1.2 billion


Discussion Agenda

1. M&A Climate


3. Predictions


1. Stable growth economy will continue, barring a destabilizing event

2. Bullish debt market will continue to drive a strong M&A environment

in 2015; but caution in 2016, due to political uncertainty

3. Opportunistic valuations will drive the acquisition of legacy media

platforms

4. Asian buyers will acquire soft asset businesses in the US and

Europe

5. And don’t forget to leverage all of your assets…

Predictions for 2015

outsell leadership council - jegi...m&a outlook – 2015 outsell leadership council 12 valuation...

Documents