Friday, March 30, 2012

Q1 2012 - Digital Media M&A Update





Digital media M&A


Social media will dominate M&A in 2012 despite healthy 2011 deal flow in the digital media and Internet space, a lot of remaining companies need to be sold.  In social gaming, Facebook will be an active buyer, and Asian buyers such as Nexon, NHN and Tencent will be looking for a North American foothold through acquisitions.

There were 681 M&A transactions in the Digital Media sector worth $36 billion for the 6 month period ending March 29, 2012 versus 615 transactions worth $42 billion in the prior 6 month period ending September 29, 2011.


The Median Enterprise Value for Digital Media M&A deals was 10.8x’s EBITDA and 2.6x’s Revenue for the 6 month period ending March 29, 2012 versus 10.8x’s EBITDA and 2.5x’s Revenue for the 6 month period ending September 29, 2011.


The breakdown between Strategic versus Financial buyers was relatively stable at 86% Strategic and 14% Financial for the 6 month period ending March 29, 2012.  Financial buyers have slightly increased their buying spree for the 6 month period from 10% as of September 29, 2009 to 14% as of March 29, 2012.


Highlights of recent Digital Media M&A transactions in Q1 2012 include:
  • Deloitte acquires mobile apps firm Ubermind for $45 million.
  • Youku acquires Tudou for $1 billion to create online video powerhouse.
  • Populis Blog Network Buying in to Latin America and acquires Cidade Internet, a Brazilian portal which publishes 10 popular websites and other blogs including Fofocando, Automovel and Das Marias.
  • Online game developer Shanda Interactive gets $2.3 billion management buyout by its CEO.

Online Marketing M&A
 

There were 160 M&A transactions in the Online Marketing sector worth $4.6 billion for the 6 month period ending March 29, 2012 versus 157 transactions worth $8.9 billion in the prior 6 month period ending September 29, 2011.

The median Enterprise Value (EV)-to-Revenue was 1.9x and EV/EBITDA was 16.8x during the latest 6 month period ending March 29, 2011 for the Online Marketing sector versus 2.2x EV/Revenue and 13.6x EV/EBITDA during the prior 6 months period ending September 29, 2011.

The breakdown between Strategic versus Financial buyers by volume was relatively stable at 87% Strategic and 13% Financial for the 6 month period ending March 29, 2012.
Highlights of recent Online Marketing M&A transactions in Q1 2012 include:
  • Mood Media Corp. acquires DMX for $86 million in cash. DMX provides multi-sensory branding services, delivering services to over 100,000 locations.
  • Social analytics company and ad network 33across announced the acquisition of Tynt, a sell-side analytics tools company that aggregates data to tell publishers about their audience, protect their content and even leverage search engine optimization to drive traffic.
  • GroupOn acquires FeeFighters, an online comparison shopping site for credit card processors. Groupon has been on a shopping spree lately, buying up a number of startups, including Kima Labs, Hyperpublic, Adku, and others in recent weeks.
  • Vocus acquired iContact for approximately $91 million in cash, $9 million in common stock and $79 million in redeemable convertible preferred stock, aggregating $169 million of total consideration, net of $10 million cash acquired.
  • Social mobile platform PlayPhone has acquired marketing specialist SocialHour for $51.5 million in stock.


The complete research report, including tables and graphs, can be downloaded (free) here: 


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