In an event held in London, Plural co-hosted the launch of this year’s ‘Media Acquisition Report’, with Collingwood Advisory. The report aims to uncover the macro M&A trends among Trade buyers and private equity (PE) firms in the Media sector. The outputs give potential sellers a set of guidelines and benchmarks, and a sense check on acquisition criteria and valuation ranges.
Media valuations have held up well over the last 12 months, with many media businesses displaying strong recurring revenues, macroeconomic
resilience, revenue diversification, scalable models and high margins and cash generation. In addition, live events have returned, and many businesses continue to transition to premium omnichannel, media-neutral models. Combined with a widening buyer pool, this has increased competition for quality assets, also impacting valuations upward.
- Buyers’ approaches are nuanced to each business, varying from a day 1-100 functional and commercial integration plan, to a ‘hands off’ approach.
- The most important element is people and culture without a happy integrated team you can’t deliver your investment thesis.
- PE buyers feel it is vital to fully integrate pre-exit.
- Buyers believe it is important for sellers to buy into the shared vision prior to deal completion to ensure alignment.
- Aligning processes and systems is essential to drive scale efficiencies and value
Fear of getting the integration wrong is part of the upfront discussion and decision vs a post close concern for the integration teamTrade buyer
- Cultural challenges, especially on a global level, were cited by all respondents. Managing entrepreneurs who are used to running their own businesses
- Technology – IT issues presented one of the biggest challenges for respondents – especially dealing with 3rd parties who deliver inadequate services. Integration of systems and tools to facilitate standardised reporting and execute on cross-sell/upsell opportunities is often the hardest thing to get done right and at speed.
- Data – Compliance and governance are becoming more of a challenge – data privacy, ESG, DE&I, sanctions lists etc – they all serve to add noise to the integration, particularly for smaller businesses who don’t have the in-house expertise. Synergies related to data are often a critical focus of integration
How to successfully integrate different business models
We spoke to buyers to understand critical challenges faced when integrating an acquired business which has a different model to the core. The challenges are:
- Focusing on technology, capabilities and risk, for digital-first businesses
- Drilling into the operations and workflows in detail before a deal closes
- Retaining key people (especially people that have built the source code or proprietary software)
- Pulling through positive synergies to deliver a single service
- Understanding the success criteria of the new business
Highlights of the Media Acquisition Report 2022
- Market Conditions
- Investment Criteria
- Focus Regions, Sectors, and Business Models
- Integrating New Business Models
- Valuation Ranges and Scale
- Value Driver Weighting
- Key Recommendations