'08 Heavy on Digital M&A, Venture Activity

NEW YORK Despite the ongoing economic meltdown, 2008 was a year of heavy merger, acquisition and venture capital activity in the online space. However, the number of dollars changing hands in such deals plummeted versus '07, according to a new report issued by Peachtree Media Advisors. Peachtree recorded 707 mergers, acquisitions and incidences of capital being raised in the digital space last year, 92 more than in 2007. But these deals were valued at $16.9 billion all told, a 62 percent decrease from the $44.4 billion tracked in '07.Interestingly, Peachtree found that more VC money flowed into all segments of the media business in 2008, up 22 percent to $3.5 billion. Companies that provide tools, software and optimization products used to support online media businesses saw the biggest boost.While there were more total capital raising transactions for companies looking to attract audiences (59 for the video and online games segment, 57 for the social networking segment), the amount of dollars flowing to the support side of the business soared to $892 million, an increase of 124 percent.That finding echoes a similar M&A report issued several weeks ago by The Jordan Edmiston Group, which cited “marketing and interactive services” as an M&A leader. “We are especially bullish on marketing services and anticipate that the advertising slowdown will dramatically alter spend patterns and surface many viable and compelling M&A opportunities, as well as unexpected buyers,” the report said.Yet Peachtree’s report also found that with M&A/venture activity slowing down dramatically in the fourth quarter of 2008, the signs point to a tougher 2009. “Unfortunately, the past year has shown that investors were not willing to finance cash burn for indefinite periods of time, proving that it was just as easy to fold an online media company as it was to start one up,” warned the report.

Performance Marketing

'08 Heavy on Digital M&A, Venture Activity

Mike Shields

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