Friday, June 03, 2005
B2B M&A Primer
What is Going On in the B-to-B M&A Market?
Nice b2b M&A primer from 101communications' Jeffrey Klein, in this month's Folio: magazine. Slightly outdated, in the sense that Hanley-Wood sold between the piece's writing and its printing (something that should at least be updated on the website, Folio:-folks! NOTE: Since updated. Thanks, Folio:!), but Klein correctly guesses at its higher multiple.
Klein's take on the hot b2b M&A market: "...media companies are very good businesses: They generate a lot of cash, they benefit from scale economies, it is often easier to buy something than to build it, and finally, being a publisher is kind of fun."
His watercooler analysis of cashflow and the value investors derive from it is right on.
One observation, though: it's this drug of cashflow which is also responsible for the inability of many media companies to invest in and adapt to the impact of competition. Investor ROI expectations, far more than the 'threat' of new technology, is what will kill many newspapers. Those cows will be milked dry before they have a chance to change their business models in a meaningful way. And their investors will have moved on to greener pastures.
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Nice b2b M&A primer from 101communications' Jeffrey Klein, in this month's Folio: magazine. Slightly outdated, in the sense that Hanley-Wood sold between the piece's writing and its printing (something that should at least be updated on the website, Folio:-folks! NOTE: Since updated. Thanks, Folio:!), but Klein correctly guesses at its higher multiple.Klein's take on the hot b2b M&A market: "...media companies are very good businesses: They generate a lot of cash, they benefit from scale economies, it is often easier to buy something than to build it, and finally, being a publisher is kind of fun."
His watercooler analysis of cashflow and the value investors derive from it is right on.
One observation, though: it's this drug of cashflow which is also responsible for the inability of many media companies to invest in and adapt to the impact of competition. Investor ROI expectations, far more than the 'threat' of new technology, is what will kill many newspapers. Those cows will be milked dry before they have a chance to change their business models in a meaningful way. And their investors will have moved on to greener pastures.
