There were 342 digital media M&A transactions in the first half of 2009 representing a total of $4.2 billion in deal value, according to an analysis and report by digital M&A advisory firm Peachtree Media Advisors.
While the actual number of deals is only down 12.3% from 390 in the first half of 2008, Peachtree said the reported transaction value has declined much more precipitously -? down 61% vs. the same period a year ago (H108) when deals were valued at $10.6 billion. This dropoff would have been even more drastic if it were not for the Live Nation-Ticketmaster merger worth 2.5 billion, the firm said.
Small, Strategic Deals Rule
The report said that, despite the decrease in total deal value, the first half of this year brought to light a number of small deals as well as a period of spring cleaning in which companies sold off non-core assets and corporate orphans, shut down unprofitable divisions and reduced staff.
Peachtree also reported that most transactions so far in 2009 have been small, strategic “tuck-in” acquisitions or follow-on, capital-raising transactions for companies that already had secured financing.
These small but strategic acquisitions will continue throughout the year as companies continue to have a “tepid appetite for acquisitions that would provide the need to recapitalize or alter their balance sheets,” predicted John H. Doyle II, founder and managing director of Peachtree Media Advisors.
Examples of such “tuck-in” acquisitions:
- UGO (Hearst) acquired 1UP (Ziff Davis Media)
- Disney acquired Kaboose
- AMC acquired Filmcritic.com
- The Knot acquired Breastfeeding.com
- HealthCentral acquired Wellsphere.com
Although there were none of what Peachtree deems “splashy” deals because of a general, widespread and renewed focus on corporate accountability and ROI during the economic downturn, Doyle noted that successful IPO of OpenTable.com has been the most noteworthy transaction this year.
Mobile & Enabling Deals Grow, Social Media Deals Decline
In a breakout by industry sector, Peachtree also reported that the Mobile and Enabling Analytics and Ad Serving sectors of digital media experienced the largest increase in deal volume over H108, while the largest drop was in the Social Media sector.