Author: Daniel Pitchford
Word count: 740
Time to read: 4 minutes
Insights from The Publishing Show, Tuesday 8th March 2022
Daniel Pitchford, COO, Collingwood Advisory
Matthew Altham, Head of Corporate Development, Wilmington plc
Richard Spilsbury, Senior Adviser, Collingwood Advisory
Andy Salter, Managing Director, DVV Media
Markets, Valuation, and Investor Confidence
The market is buoyant – there is pent up demand from Private Equity, and Private Equity backed buyers especially. Activity is increasing, after what was an understandably slow 18 months. The volume of transactions taking place is really ramping up with many predicting 2022 to be a bumper year. However, publicly traded buyers can be more patient, which arguably enables such buyers to be more selective and wait for the right assets (at the right price).
“There isn’t a burning need to deploy capital in the same way for a publicly traded company”
Matthew Altham, Wilmington plc
Another factor which is driving demand, is the fact that higher quality businesses in many cases came out of the pandemic stronger with higher quality of earnings – these are the assets which are most highly valued.
Subscriptions – specifically data-led products – are increasingly attractive, which can also make them challenging for buyers given the competitive nature of the sale processes and expected valuations. Whilst the recurring revenue ties to a greater quality of earnings which is attractive to buyers, it should largely come back to the fundamentals of what delivers most value for your audiences, as opposed to simply chasing subscriptions because the multiple is higher. Quality engagement with audiences is a foundational characteristic.
“It’s a sellers’ market”
Andy Salter, DVV Media
On the Ad funded side of the market, a strong characteristic of successful businesses is they have become an always on, integrated solution for a marketer, as opposed to a more transactional or ad hoc service. Businesses which are able to really position themselves as a partner, and an extension of their clients’ marketing functions, are the ones reaping the rewards. It also talks to resilience: if your client needs to trim their marketing budget by 10%, you’re not the one they turn off. Being an integral workflow solution is what drives long term value, and desirability among buyers.
Data Strategies as a Tool for Value Creation
Internal data policy is increasingly important from a governance perspective. External value extraction strategy means being able to mine insights from your audience or client data, and this is where businesses have historically been slow to capitalise. Businesses which have developed a data strategy which is proven to deliver value are positioning themselves ahead of others.
The importance of content, and the quality of editorial and thought-leadership, recognised as authorities in their market is a valuable characteristic. There are more old fashioned businesses in the market which are bolting on data subscription service as they think this will drive a multiple without it first being rooted in market and audience engagement, and ultimately need. The bar is certainly higher when it comes to buyer diligence on validating whether a business truly has a valuable data proposition.
Preparing for Sale, and the Sale Process
It’s about defining the right value creation route through a sale rather than thinking simply about a liquidity event. Having a clear understanding of who the preferred buyers are and the strategic synergies to exploit. Understanding the transaction is the start of the relationship, it’s likely a 2-3+ year partnership to capitalise on the overall outcome as a seller .
“If I were to wind back the clock, ‘start early’ would be my advice. Systems, process, governance”
Andy Salter, DVV Media
Starting with the joint business plan and vision from the beginning of the sale process to build alignment . As a buyer you take the set of numbers a seller presents in the IM, and you run your own model, based on the synergies and how to extract additional value.
Spending enough time with the management team to really understand the culture and ambitions. Deals which have not gone as well, have been those where not enough time was dedicated at the beginning. Thought around how the products can be optimised, cross sell, capabilities roll out, and operational efficiencies all come into play.
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