UK business media lures PE firms amid Brexit – report

Private equity firms are seeing lucrative targets in the UK media industry amid wider political uncertainty.

PE-backed acquisitions of business media and information-focused companies in the UK reached a record €3.6 billion in total enterprise value across 29 deals in the 12 months to March, according to a report from M&A advisory firm Livingstone. Further capital was also deployed into 11 add-on acquisitions.

Nearly 90 percent of transactions were in the mid-market – deals valued up to £500 million ($604 million; €540 million) – doubling in number on the previous year. Deal value in the mid-market also tripled year-on-year to £1.6 billion, according to the report.

“In a market subject to mounting economic and political uncertainties, we have seen investors focus to a greater extent on businesses able to demonstrate both resilience and growth strategies independent of economic conditions,” Nick Field, director at Livingstone, told Private Equity International.

The characteristics of many business media and information providers – sticky customer relationships, high margins, rapid scalability, strong cashflow, frictionless international trade – become relatively more valuable in the current environment as investors seek assets able to deliver performance in an environment of uncertainty, he added.

In general, buyers are attracted to proprietary data gathered by business media and information-focused companies, the report noted. PE firms were also attracted by consolidating positions in existing markets, with North America the main destination for cross-border deals.

PE firms mainly backed buyouts of new platforms or made add-on acquisitions for portfolio companies, the report found. Professional information and trade exhibitions were the most active segments for the period. Examples include Bridgepoint Growth’s acquisition of highways data provider Elgin in August last year, Providence Equity Partners’ acquisition of trade show operator CloserStill in December,  Phoenix Equity Partners’ purchase in November of security platform Nineteen Group and Charterhouse Capital Partners’ £561 million take-private of B2B media company TARSUS in May.

Bridgepoint acquired Private Equity International‘s parent company PEI Media in June last year.

Data products within financial markets such as index, factor and ESG investing and in opaque markets such as private equity and private credit recorded the most organic growth, the report found.

Overall, business media and information operators have seen high valuations, averaging 20.2x EV/EBITDA, a 9 percent increase from the previous year. Looking at individual segments, the credit and risk data segment has been the most expensive over the last 18 months, with an average valuation of 23.6x EV/EBITDA.

Field noted that investors zooming into the business media and information sector could come across two challenges: digital product development and the large volume of data.

“The growing volume of granular data generated by media and information operators provides scope for very powerful analysis of their business models, in particular around customer behaviour,” Field said. “Dealing with these large, often idiosyncratic data-sets to draw actionable insights requires specialist skills and experience, which can present a challenge for external investors.”