Friday, December 28, 2012

New York, NY December 28, 2012 – Burgeoning innovation, rising corporate investment and a year-end rush to beat the tax man drove robust mergers and acquisitions in 2012 for the media, information, marketing and technology sectors.  M&A surged to 1,351 transactions for the year, or 50% more than in 2011, at a total value of nearly $75 billion, according to The Jordan, Edmiston Group, Inc. (JEGI) (, the leading independent investment bank specializing in M&A advisory services across these markets. 

This record-setting volume was driven primarily by smaller deals, as approximately 90% of M&A transactions were less than $50 million in value.  However, 14 deals topped $1 billion for the year, including six in Q4. 

Over 400 of these transactions closed in the fourth quarter, many in December, as sellers sought to beat the calendar on anticipated tax changes in 2013. Indeed, of seventeen transactions closed this year by JEGI, five closed the week before Christmas. 

Investment in the interactive markets, including B2B and B2C Online Media & Technology, Mobile Media & Technology, and Marketing Services & Technology, continued to drive the bulk of M&A activity, accounting for 70% of all transactions for the year and 62% of value.  Marketing automation companies were in great demand, with acquisitions by Salesforce, Adobe, Oracle and ExactTarget.

Continued growth in digital ad spending helped propel this avalanche of interactive M&A.  Internet and mobile advertising revenue in the U.S. reached $9.26 billion in Q3, the largest quarter on record, according to the Interactive Advertising Bureau (IAB).  These figures showed an 18% climb over Q3 2011 and a 6% increase over Q2 2012.

Randall Rothenberg, President and CEO, IAB, said, “These historic investments in interactive point to the strong results that marketers are receiving from digital marketing.  It is a highly effective medium for interacting and engaging consumers, who are no longer passive, but are active participants in contemporary media online, through social media, and on-the-go with mobile.”

While interactive continues to grow rapidly, the broader media and information industry saw increases in M&A across more “traditional” sectors, such as B2B Media (up 143% in number of deals and nearly 8x in deal value), Database & Information Services (up 40% and 87%), and Exhibitions & Conference (up 56% and 94%). 

Healthcare Information & Technology, another hot area of investment, saw M&A deal activity increase 86% in 2012, with more than $10 billion of deal value for the year.  Chris Calton recently joined JEGI as a Managing Director to oversee the firm’s healthcare information and technology practice. 

Largest Deals of 2012
The Marketing Services & Technology sector accounted for nine of the 30 largest deals of the year, led by Dentsu’s agreement to acquire global advertising network Aegis Group for nearly $5 billion, expected to be completed in Q1 2013.  Other large marketing services transactions included the recently announced buy-out of Arbitron by Nielsen for $1.22 billion and Microsoft’s acquisition of Yammer for $1.2 billion in June. 

The Database & Information Services sector accounted for seven of the largest 30 deals, including three of the Top 10, led by the $3.3 billion buy-out of TransUnion by Advent International and Goldman Sachs in February. 

B2C Online Media & Technology was active, accounting for five of the top 30 transactions for the year, including two Q4 deals: the Priceline acquisition of Kayak for $1.6 billion and Permira Advisers’ acquisition of for $1.5 billion. 

The Healthcare Information & Technology sector saw four transactions make the Top 30 list for 2012, including Veritas Capital’s acquisition of Thomson Reuters’ Healthcare business for $1.25 billion in April.  Two Top 30 deals for B2B Online Media & Technology included Alibaba’s buyback of Yahoo’s stake in the business for more than $7 billion. 

Strategic Acquirers Lead the Way
Strategic company acquirers accounted for 24 of the Top 30 transactions, while the other six were led by private equity buyers.  There were no repeat buyers on this list from last year, but the global agency holding companies were active, with Dentsu, WPP, and Publicis represented.  Large technology companies were also active buyers in 2012 – acquisitions by Microsoft, Facebook, Oracle, Intuit, Priceline, and Salesforce all made the Top 30. 

JEGI Closes with a Flurry of Activity
JEGI closed six transactions in December 2012 and 14 deals in the second half of the year, bringing the year’s total for the firm to 17.  Only two of JEGI’s December deals were officially announced before year end: the sale of Intent Media, a leading provider of news and information for the European entertainment and technology markets, to NewBay Media, a Wicks Group portfolio company; and the sale of Empathy Labs, a digital strategy and multi-channel experience design firm and portfolio company of ALC, to EPAM Systems.  The balance of these transactions will be announced in early January. 

With the late 2012 surge in deal activity propelled in part by concerns over imminent tax code revisions, JEGI expects that Q1 2013 will be quieter than these past six months.  However, several key factors in the marketplace indicate good prospects for a healthy M&A market in the year ahead:

  • Both strategic companies and private equity firms, which continue to hold unprecedented levels of cash and face slower organic market expansion, will continue to acquire for growth and return.
  • Private equity firms, which raised record amounts of capital in 2007 ($313 billion) and 2008 ($312 billion), are generally subject to five-year investment windows, so they will be looking to put their capital to work.
  • Additionally, PE funds are expected to continue divesting companies acquired from 2006 to 2008, as they typically seek to exit portfolio companies five to seven years after acquiring them. 
  • Lenders continue to seek out opportunities to finance acquisitions of companies with at least $10 million of EBITDA, with a strong preference for companies with strong recurring revenue streams, “must have” information, and technology driven models. 
  • The media and technology markets continue to expand much more rapidly than the general economy.  With the rise of mobile via handheld devices and tablets, as well as new formats in social and video, interactive advertising revenue should continue its strong growth in the months ahead.  Companies will increasingly turn to M&A to enhance and retool their capabilities, recruit talent and generate additional revenue streams. 

M&A Highlights for 2012
Deal value for the b2b online media and technology sector doubled to nearly $12 billion in 2012, on 84 announced deals.  A majority of the value was driven by two of the largest transactions of 2012: Chinese B2B marketplace Alibaba reacquired Yahoo’s interest in the company for $7.1 billion; and Carlyle Group purchased Getty Images, a creator and distributor of visual and digital content, from Hellman & Friedman for $3.3 billion.  In Q4, the most notable deals were Adobe’s acquisition of Behance, a social online platform where artists can showcase and discover creative work; and eFront’s acquisition of Investment Café, provider of a suite of Web-based financial reporting and fundraising products to the alternative asset community, for $50 million. 

B2c online media and technology was the second most active sector for M&A in 2012, with 252 transactions at a total value of $10.1 billion.  The number of deals and value increased 18% and 33%, respectively, versus 2011 levels.  Q4 saw’s acquisition of Kayak, an online travel site, for $1.6 billion; the acquisition by Permira Advisors of, a genealogy web site, for $1.5 billion; the j2 Global acquisition of Ziff Davis Media, a media company focused on the technology market and a Great Hill Partners portfolio company, for $175 million; and the management buy-outs of Experian’s online price comparison and lead generation sites PriceGrabber, LowerMyBills and ClassesUSA.

M&A increased strongly in the business-to-business media sector, after several years of little activity.  The sector saw 34 deals at a total value of $411 million, which represented a 143% increase in number of deals and a more than 8x rise in deal value over 2011 levels.  Notable deals in Q4 included the Penton Media acquisition of Fairfax Media’s Farm Progress, which provides farm focused events and magazines, for nearly $80 million; NewBay Media’s acquisition of Intent Media (as noted above); and Reed Elsevier’s sale of Variety to Penske Media. 

The consumer magazines sector saw a 34% increase in number of deals, but a sharp decline in deal value, as there were no $100+ million transactions in this sector in 2012.  Throughout the year, acquisitions in this sector were primarily of small publishing companies and individual magazines.  This trend held in Q4, when GrindMedia acquired Ryan Communications Group, a publisher of Dirt Sports and Off-Road Industry magazines and Modern Luxury acquired Aspen Magazine from Ridge Publications.

The database and information services sector saw the number and overall value of deals increase 40% and 87%, respectively, in 2012, with nearly $11.5 billion of total deal value.  Seven deals of more than $100 million in value closed in Q4, including the: Experian acquisition of 30% of Serasa, the Brazilian credit data provider, for $1.5 billion; Equifax acquisition of CSC Credit Services, a provider of consumer credit services and related information, from Computer Sciences Corporation for $1.1 billion; NASDAQ OMX Group acquisition of Thomson Reuters’ Investor Relations, Public Relations and Multimedia Solutions businesses for $390 million; sale of Infogroup’s OneSource, a provider of sales enablement and business intelligence SaaS solutions, to Cannondale Investments and GTCR; and Leonard Green & Partners acquisition of Investcorp’s CCC Information Services, workflow tools to the insurance automotive claims and collision repair industries.

The education information, technology and training sector saw 64 transactions announced at a total value of more than $5 billion in 2012, representing an 8% uptick in number of deals, but an 83% rise in deal value versus 2011.  Notable deals in Q4 included the Apollo Global Management acquisition of McGraw-Hill Education, a publisher of textbooks and other materials, for $2.6 billion; Pearson’s acquisition of EmbanetCompass, online educational services, for $650 million; and the sale of Adam Matthew Digital, a creator of online resources for university research, to SAGE.

The exhibitions and conferences sector saw increased activity in 2012, with 50 transactions at a total value of $874 million, representing increases of 56% and 94%, respectively, over 2011 levels.  In Q4, notable deals included the Advanstar Communications acquisition of ENK International, an organizer of fashion events, from Forstmann Little; ITE Group’s acquisition of Asian Business Exhibitions and Conferences, a producer of 19 events across 11 verticals led by construction, for $22.5 million; and George Little Management’s acquisition of the events groups of Vertical Web Media, with conferences in the Internet space, such as Internet Retailer Conference & Exhibition. 

In 2012, the healthcare information and technology sector was the third most active for M&A, with 156 transactions for the year, representing an 86% increase over 2011 levels.  Deal value rose a more modest 17% in 2012, to more than $10 billion.  Q4 saw four deals with over $100 million of value, including: the Nuance Communications acquisition of J. A. Thomas & Associates, healthcare compliance and documentation improvement solutions, for $265 million; McKesson’s acquisition of MED3000, healthcare management, operations, and information technology services; the acquisition by Conifer Health Solutions of Dell’s Revenue Cycle Solutions Line of Business for Hospitals and Healthcare Systems; and the Ferrer Freeman acquisition of Arcadia Solutions, data-driven Health IT services.  Other active acquirers in the sector in Q4 included Hearst Corporation, Wolters Kluwer, Diversified Communications, AccentHealth, Decision Resources, and Healthstream, among others.

The marketing services and technology sector continues to lead in M&A volume and value with 458 transactions announced for the year, at a total value of more than $20 billion, up 67% and 36%, respectively, over 2011.  Q4 saw a number of notable transactions, including the:

  • Nielsen acquisition of Arbitron, a media and marketing research firm, for $1.2 billion;
  • Oracle acquisition of Eloqua, which offers on-demand revenue performance management software, for $871 million;
  • Epsilon acquisition of Lake Capital’s Hyper Marketing, a marketing services network, for $460 million;
  • Quad/Graphics acquisition of Vertis, a provider of targeted advertising, media, and marketing solutions, for $258 million;
  • InterMedia Outdoor acquisition of Outdoor Channel Holdings, an entertainment and media company servicing the outdoor and lifestyle segments, for $214 million;
  • ExactTarget acquisition of Pardot, a marketing automation company, for approximately $95 million;
  • EPAM Systems acquisition of Empathy Labs, a digital strategy and experience design firm;
  • Warburg Pincus acquisition of CROSSMARK, a provider of sales and marketing services;
  • AOL acquisition of Buysight, a retargeting and online retail lead gen specialist;
  • Nielsen acquisition of SocialGuide, which offers analysis of social media conversations about TV programs;
  • Accenture acquisition of avVenta Worldwide, a provider of interactive marketing production services; and
  • Seacrest Global acquisition of Civic Entertainment Group, a provider of experiential marketing, strategic marketing partnerships, social campaigns and digital and social media.

Other active acquirers in the quarter included many of the global agency and market intelligence holding companies, such as WPP, Publicis, Omnicom, GfK, and Aegis Group, as well as newer competitors in marketing services like Gannett, Rakuten, Sapient, INFOR, Advisory Board, Zillow, Google, Microsoft, and UBM.

The mobile media and technology sector saw 124 deals at a total value of $3.5 billion in 2012, representing increases of 72% and 77%, respectively, over 2011 levels.  Games and applications continue to drive M&A activity across mobile, primarily led by strategic acquirers, given the small size and low EBITDA dynamics of the sector.  The largest deal of Q4 was Gree’s acquisition of Pokelabo, a developer of social mobile games, for $174 million.  Viggle acquired GetGlue, a social TV application, for $79 million.  Active acquirers in the sector included Google, Bertelsmann, Twitter, Yahoo, Zynga, MediaMath, and Urban Airship, among others. 

About JEGI
The Jordan, Edmiston Group, Inc. (JEGI) of New York, NY, the leading independent investment bank for the media, information, marketing and technology sectors, celebrated its 25th anniversary in 2012.  Since 1987, JEGI has completed more than 500 high-profile M&A transactions for global corporations; middle-market and emerging companies; entrepreneurs; families; and private equity and venture capital firms.  For more information, visit

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