New York, NY (PRWEB) October 1, 2009
The first three quarters of 2009 saw 466 M&A transactions worth $ 16.4 billion announced across the media, information, marketing services and technology sectors, as tracked by The Jordan, Edmiston Group, Inc. (JEGI) (http://www.jegi.com), the leading independent investment bank specializing in acquisitions and divestitures across these core markets. Two markets actually saw growth in M&A activity in 2009 over 2008 the Mobile and Education sectors.
Overall transaction volume fell 30%, while deal value declined 42% through the third quarter, versus the same period of 2008. While the number of announced deals is on par with 2005-2006 levels, total deal value is on pace with 2002-2003 levels.
Strategic Company Acquirers Lead Strong Uptick in Q3 M&A Activity
While the first two quarters of the year were moribund, the M&A market showed signs of life in Q3 with 168 announced transactions valued at $ 11.1 billion. By comparison, the entire first half of the year saw only $ 5.3 billion in deal value, with a high concentration of small distressed sales. This resurgence was driven by over a dozen $ 100+ million and $ 1+ billion transactions, which drove average deal size from $ 18 million in the first half of the year to $ 66 million in Q3.
Education Information, Technology and Training deals increased by 15% in number and 41% in value to $ 3.2 billion, as this sector benefits from innovation, government spending and some shelter from the economic cycle. Meanwhile, the Mobile Media & Technology sector saw 25 transactions worth just under $ 400 million, up 56% in number and 76% in value from 2008, as this long-expected market begins to accelerate.
Strategic buyers accounted for roughly 80% of total deal value through Q3, as they took advantage of better-priced opportunities and invested in innovative business models, new growth and integrated solutions. Private equity firms have played only a minor role in acquisitions so far this year, as many have been focused on improving profitability and restructuring debt in overleveraged portfolios.
Re-Heating Sectors Drive M&A
The most active M&A markets covered by JEGI have been Education Information, Technology & Training; Marketing & Interactive Services; Mobile Media & Technology; and Online Media & Technology. Together, these four sectors accounted for 337 deals or 72% of the transactions announced and 87% of deal value ($ 14.2 billion) in the first three quarters.
Given strong growth forecasts for online advertising in the years ahead, interactive and mobile categories continue to see active M&A.
According to Rob Norman, CEO, GroupM Interaction, global Internet advertising will climb 11% to $ 64.7 billion in 2010, accounting for 15% of all global measured ad spending, up from a 13% share in 2009. Meanwhile, global mobile advertising is expected to climb 19% to $ 3.3 billion in 2010.
A recent Yankee Group report estimates that nearly seven billion US Smartphone application (app) downloads will generate $ 4.2 billion in revenue by 2013, up from $ 343 million in 2009. With the number of US Smartphone users set to quadruple to 160 million by 2013, Yankee Group describes the anticipated market growth as a gold rush.
Looking Forward
JEGI recently announced two noteworthy transactions: Times Publishings sale of government information provider Congressional Quarterly to The Economist Group; and the sale of Strategic Insight, a provider of news, analysis and information to the mutual fund industry, to Asset International, a portfolio company of Austin Ventures. The firm has a robust pipeline and expects to close several transactions in the final quarter of 2009.
M&A Highlights