Art & Commerce





Merger Momentum An investment-banking boutique that specializes in merger work, AdMedia Partners helps sellers find buyers and buyers find sellers. For several years, the company has conducted a survey among senior executives within the industry to gauge the outlook for merger and acquisition activity. The latest study points to a continuation, if not an acceleration, of deal making. On average, the survey respondents expect the ad business to grow 6 percent in 1998 and their own business to rise 15 percent. Acquisitions provide a way for companies to grow even faster. The hottest “target” sector? Interactive. More than 75 percent of the survey’s respondents think activity in this area will increase, even though profits from new-media work are difficult to achieve. Another key finding: Valuation levels are creeping up. A common practice is to value a merger mate as a multiple of operating income. In 1995, the typical deal was struck at around five times operating profits, or at 65 percent of revenue. These coefficients are roughly 10 percent higher now. More deals and at higher prices: a recipe sure to gladden an investment banker’s heart. –Alan Gottesman (westendal pobox.com) is principal of West End Consulting.

THE GOTTESMAN FILE
Senior executives are optimistic about the future of the ad business, especially in terms of mergers and acquisitions.

………………………………..1997…..1995

…..% who shopped or bought…..83%…..76%
…..% who found bank financing harder…..2%…..7%
…..Multiple of operating profits…..5.5…..5.0
…..Buyers who see need to act now…..89%…..76%*

Source: AdMedia Partners. *1996 data