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Attention from consumers or businesses is a valuable currency, and proving increasingly difficult to get. Event organisers who invest in media companies can help increase that attention. Whether it is via digital platforms or print publications, media businesses are attractive to investors because of ongoing cash flow and community engagement. Advertisers are potential exhibitors and sponsors, while readers are likely event visitors.
Cash flow
Advertising income and paid subscriptions allow media businesses to accurately predict future income and cash flow. At the same time, they also provide brands opportunities to connect with relevant buyers. Secondly, subscriptions, especially those that provide high-level content found nowhere else, will bring in predictable renewals and revenue.
Communities
Engaged communities are good business. Strategic and financial buyers are increasingly investing in businesses which own a significant part of an ecosystem of a sector – or want to increase their share of that ecosystem through acquisitions. Successful media businesses are both entrenched and active within their industry sectors.
Arguably the most important KPI for a media business is engagement within its community. Whether a potential buyer is a Private Equity firm who wants to maximize profitability and exit in a few years, or a large business interested in expanding their customers and thought leadership, communities play an integral role in the attractiveness of a media business acquisition.
Using data and constant communications, media businesses know their audiences. Communities are being monetised more and more via the data that is available – with a unified database being the holy grail.
Margins and recurring revenue
Media businesses have gone through massive changes over the last ten years trying to improve margins while delivering an ever-evolving suite of products to their audiences. Generally speaking, margins tend to be better for niche B2B or subscription-based businesses, though some B2C enthusiast media companies are very successful.
Once content is created, distribution costs are low, and it is easily repurposed for multiple channels – video, white papers, newsletters, etc. And the recurring nature of the revenue is preferred to starting from scratch every year. A committed audience in a niche B2B sector is vital in attracting repeat advertisers.
Cross-selling and synergies with other products and divisions
Media businesses must keep up with evolving technologies to compete effectively in today’s diverse marketplace, with more products being developed to create cross-selling opportunities. By pairing events and media, business owners can create synergies by using media content and connections for their events and vice versa. Event companies find having content creators and “owning audiences” to be good business.
Scalability
Buyers always consider growth opportunities as a factor in the attractiveness of an investment. Media businesses are scalable in part because they rely on content created once and used multiple times, instead of manufacturing, for example. Digital platforms can inexpensively and quickly grow into new regions and sectors.
Conclusion
Media companies have built in and earned loyalty from their subscribers and advertisers. With their communities and relatively low cost to expand product offerings and regions, they will continue to be attractive to buyers.
Grimes, McGovern & Associates is a leading lower middle-market Mergers & Acquisitions firm advising media, events, and information services businesses globally. See our transactions here.
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