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Here on the East Coast, summer weather forgot
to arrive until the end of June. With the sun finally breaking
through the rain clouds, we’re seeing hints of brighter
days ahead for the economy as well. In the second quarter,
investor confidence in the financial markets fueled debt issuance
of $1.5 trillion globally and equity offerings reached nearly
$260 billion, almost four times the amount recorded during
the first quarter, and the highest amount since the second
quarter of 2008, according to Dealogic. The key for continued
confidence and economic growth will be corporations reaching
profit projections in the second half of the year, led by
emerging markets, especially the large Asian economies, stimulating
demand.
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On the M&A front, JEGI has seen
a recent increase in M&A activity, including Microsoft’s
announced divestiture of Razorfish, which could very
well be a bellwether transaction. Strategic buyers are
intent on investing in new business models and integrated
solutions across multiple media channels. Media companies
are rapidly embracing a multi-channel, digitally-driven
“consumer connection” model, delivering
highly targeted content when and how consumers want
it. John Blossom, founder of Shore Communications, summed
up this phenomenon in “Content Nation”,
his recently published book on social media: “The
institutions we used to rely on to provide us with cohesion
and value in our lives are becoming less valuable in
the face of publishing technologies that allow us to
organize ourselves and our lives more to our suiting.”
For the first six months of the year, half of the 150
M&A transactions in JEGI’s sectors involved
Online Media & Technology or Marketing & Interactive
Services companies. Additionally, the Mobile Media &
Technology sector is warming up, as there was a 46%
increase in announced transactions as compared to the
first half of 2008. iPhone applications, mobile marketing,
advertising, content, social networking and payment
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solutions are all key areas of growth and
investment. As Peter Kafka, Managing Editor of Silicon Alley
Insider said, “We’ve been hearing about the inevitable
rise of mobile as an advertising, content and commerce platform
for years, but in the last year or so, this now seems plausible…”
The Education Information, Technology & Training market
also saw robust M&A activity in the first half of 2008,
with 48 deals announced, marking a 26% increase over 2008
levels. Strategic companies and financial firms are interested
in investing in this market, with growth forecast at a compound
annual growth rate (CAGR) of 6.8% through 2012, according
to the 2009 VSS Communications Industry Forecast. Peter
Davis, President, McGraw-Hill Education stated, “Education
markets offer tremendous long-term growth opportunities.
Technology enabled education solutions, the fastest growing
part of the business, present exciting new opportunities
to enhance student success.” Mike Marchesano, the
JEGI Managing Director who covers the Education market for
the firm, summed it up, “…strategics continue
to retool their education models with new technologies and
digital media offerings, while financial firms are attracted
to long-term growth prospects and strong macroeconomic trends
for this sector.”
Speaking of financial firms, the PE and VC
investors who responded to JEGI’s current survey told
us they are actively looking for acquisitions, within a handful
of key investment themes: 1) multi-product strategies and
vertically branded media that embed multiple touch points
in the customer’s workflow; 2) recurring or semi-recurring
revenue streams; 3) critical information, software and application
providers, especially in the Education and Healthcare markets;
4) digital media properties; and 5) targeted and performance
based marketing services, especially lead generation and e-mail
marketing.
On other fronts, we are pleased to welcome Wenda Harris Millard,
the veteran digital advertising and media industry senior
executive, to our Advisory Board. Ms. Millard helped build
the model for advertising on the Internet, and her deep experience
as a high-caliber media industry executive will help JEGI
continue to thrive from a diversity of knowledge and insights.
We look forward to benefiting from her contributions.
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take note that Tolman Geffs, the JEGI Managing Director
who covers digital media for the firm, will be joining
a panel discussion titled “Role of Institutional
Capital in Shaping Internet Advertising” at LeadsCon
East on August 18th at the Marriott Marquis in New York
City. LeadsCon is offering a special rate for “JEGI
Partners” who register via the following link:
http://www.leadscon.com/jegi-special-partner-pricing.html.
Finally, JEGI is very excited to be teaming up with
Outsell again to produce the third annual Signature
Event being held October 4-6 near Dublin, Ireland. This
exclusive, invitation-only event will feature 10 dynamic
industry leaders, who have successfully guided and retooled
their companies through current economic conditions,
and are actively creating and investing in new models
for growth. They include Ian Smith, CEO, Reed Elsevier;
Lex Fenwick, CEO, Bloomberg Ventures; Richard Malloch,
President, Hearst Business Media; Clare Hart, President,
Dow Jones Enterprise Media Group; and Shawn Colo, Co-founder
and Head of M&A, Demand Media. To register for this
“no guts, no glory” not-to-be-missed event,
visit www.outsellinc.com/signature/2009
or contact Emily Pilk at epilk@outsellinc.com.
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JEGI's
Emerging Company Dinner
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JEGI
hosted its second Emerging Company Dinner of
2009 on June 3rd at the 21 Club in New York
City. (From left) Cathleen Black, President,
Hearst Magazine Group; Matthew Egol, Partner,
Booz & Company (sponsor); Jonathan Hsu,
CEO, 24/7 Real Media (WPP); Tad Smith, CEO,
US, Reed Business Information; and Wilma Jordan,
CEO, JEGI. |
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Please enjoy this edition of the Client Briefing, and feel
free to contact our Managing Directors or me with any questions
regarding the marketplace and/or our services.
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