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Report: Direct and digital M&As up in Q4 2009, trend to continue in 2010

Direct and digital mergers and acquisitions increased in the fourth quarter of 2009 compared with the third quarter in terms of deal value and number of deals, according to investment banker Petsky Prunier, which released its quarterly “Deal Notes” on December 31. Petsky Prunier specializes in the direct and digital sector.

A total of 201 deals valued at $13.5 billion occured in in Q4, a 78% jump vs. Q3 and a 246% increase compared with Q4 2008. The deals occurred across seven segments: interactive advertising; advertising and promotion; out-of-home and specialty media; marketing technology; digital media; software and information; and marketing services.

Digital media was the most active segment in the fourth quarter. Hellman & Friedman’s $350 million purchase of Web Reservations International, a travel e-commerce company, was the largest transaction. Interactive advertising was the second most active segment in Q4, Petsky Prunier said.

“The reason for the big jump [in deals and deal value] is confidence levels came back,” said Bruce Biegel, managing director at Petsky Prunier’s Winterberry Group, its strategic consulting arm, adding that as confidence grew, credit eased somewhat.

“Adobe-Omniture and IBM-SPSS [acquisitions] were both good sized deals that got people thinking about M&A,” Biegel said. “It was the bottoming and the two big trigger deals that started to loosen the market.”

He predicts deals will continue and accelerate into the new year.

“If 2009 was about … cost cutting, when you look at 2010, it’s about growth,” Biegel explained. “Those companies that had cash were waiting for the right signals from the economy in order to move.”

Biegel said he expects further acceleration of deals in 2010. “It’s about buying good companies at reasonable prices to accelerate top and bottom line growth.”

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