Peachtree Media Advisors

Digital Media Mid-Year Report

Tuesday, August 16th, 2011 at 10:07 am

Today, Peachtree released the 2011 Mid-Year Digital Media Review. Total transaction volume in the first half of 2011 decreased by 12.9% from 1H10 to 491 transactions, underscoring the uncertainty in the U.S. economy. However, total reported transaction value increased by 125.9% to $20.3 billion, in large part due to Microsoft’s $8.5 billion acquisition of Skype, but also because of the continued rapid growth of the mobile and e-commerce sectors. Furthermore, a substantial increase in capital raise activity indicates that investors are cautiously optimistic and the digital media sector is continuing to grow despite the economic conditions.

The complete report is available here.


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Tech Bubble Blogpost by Yoni Jacobs

Monday, January 3rd, 2011 at 1:44 pm

Below is a link to an excellent post by Yoni Jacobs regarding the recent run up of stock prices in the tech .  I agree with most of what Yoni says regarding the tech bubble, but as it relates to Groupon turning down a $6 billion offer, he does not mention that both Google and Facebook also turned down a multi-billion dollar bids from Yahoo and Microsoft as early stage companies.  Had either of those two companies taken their respective offers, they would have clearly left a lot on the table.

Sign of a Renewed Technology Bubble

The bottom-line is that technology investors and acquirers have to have a well-thought-out  plan when it comes to the Cloud.  Buying a company just because they are a SAAS company on the Cloud is not a good enough reason to make an acquisition.  CEOs need to adhere to the golden rule of M&A when it comes to evaluating targets in this new cloud environment, if it is good for the customer then it is a good acquisition.  Providing a software or service over the Cloud is meaningless unless someone is paying for it.


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The Cloud Needs Renewable Energy, IT & the Internet

Tuesday, November 23rd, 2010 at 4:28 pm

I just returned from a wave of conferences and wanted to provide the link to an interesting presentation given my Emulex at the Interop conference in NYC.  This presentation clearly outlined the building blocks necessary for the cloud to be successful: power; cooling; control (mgt); network (data); and optimized delivery.  The utility scale data center needs to not only be efficient, but fast and reliable (secure is a given).

Link to the Emulex Interop Presentation

David Crespi, CTO of Emulex, goes on to state that the utility scale data center, which is the next step in the cloud evolution, needs to be near a power source with reliable and low-priced energy as well as a natural cooling source, such as water.  This led me to believe that the future of the utility scale data center lies at the intersection of three completely different vertical markets – greentech/renewable, IT and the Internet.   For example, water can provide both a cooling mechanism as well as hydro-power, which is a form of renewable energy.  This water can then be channeled through the data center to cool the servers during the day.   The IT server stack needs to be large enough to allow companies to scale at any time in order to use the utility pricing model of the cloud effectively.  Finally, there is the Internet.  The data center needs to unfettered Internet access, so that companies are able to access their data with minimal interruption.

I am clearly not doing the presentation justice in my blog post, but I think it is interesting the way renewable energy, IT/data centers and the Internet will converge to make utility scale cloud a reality.


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AOL-Yahoo Is Much Ado About Nothing

Tuesday, October 19th, 2010 at 11:31 am

Here is an interview that I did for The Deal last week.  Unfortunately, you would have to purchase a subscription if you wanted to see the interview on their Website.  But here is a you tube link to the interview.

The Deal Interview with John Doyle

The Deal is a great publication and I hope they do not get too upset with me for posting this link on my blog.  If you are in to who’s who in private equity or investment banking, then I would suggest you get a subscription.  These guys are dialed in to the financial sector.


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The Deal

Saturday, August 21st, 2010 at 3:56 pm

Here is a link to a very short interview that I did the other day at The Deal regarding the onslaught of IPOs.  I was trying to say that there are no buyers for many of these businesses, so the only exit is an IPO.  Also, I would like to clarify that I am not insinuating that these are not good businesses, just that there are no buyers for various reasons – diversified media companies are still hurting, tepid and not ready to make large bets.

http://www.thedeal.com/video/inside-the-deal/ipos-for-hulu-nielsen-etc-due.php

Best,

John


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2010 Mid Year Digital Media Report

Tuesday, August 17th, 2010 at 12:27 pm

Peachtree just just released its 2010 Mid-Year Digital Media M&A Review, which is available using the following link:

http://peachtreemediaadvisors.com/research/2010MidYearDigitalMediaReview.pdf

You may also look forward to Technology and Cleantech reports that will be coming out soon as well.

Best,

John


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Excellent News in Media Post

Wednesday, May 5th, 2010 at 12:38 pm

Discovery’s ad revenue is up in Q1. They are also investing $100 million in O’s new cable network and Oprah.com.

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=127263&nid=113993


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Valuations are Inching Higher

Wednesday, May 5th, 2010 at 12:03 am

Digital Media company valuations are beginning to increase.  As seen in the chart below, the average revenue multiple for consumer digital media companies is 3.5x Revenue.  This revenue multiple is clearly below the lofty 5x to 10x revenue multiples of 2005 and 2006, but substantially higher than where multiples were at this point last year.  Although valuations are increasing due to a better economic outlook and advertising environment, do not expect a super-charged M&A environment.   Many transactions are going to involve strategic acquisitions with scale as well as small tuck-in acquisitions of current partner companies.  As Hearst’s acquisition of iCrossing for $375 million shows, CEOs are making large strategic acquisitions that take them to a new place with minimal scalability risk (healthy, profitable and growing).

On the other hand, larger companies will also continue cherry-picking small tuck-in acquisitions that complement their existing audiences by adding functionality or niche content.  For example, MSNBC acquired BreakingNews.com in January 2010, Time Inc, acquired personal shopping engine StyleFeeder in January 2010 and WebMediaBrands acquired social media site Rotorblog in March 2010.

The outlook for digital media M&A is more optimistic for 2010, but expect more selective deal-making.  This year companies have cleaner balance sheets and a re-calibrated strategic focus, which means that acquisitions will have to make business sense.  If the CEO cannot make a clear case for the strategic fit to her board, then she will be hesitant to take on the risk.


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Investing in Brazilian Digital Media

Wednesday, February 3rd, 2010 at 11:12 pm

Peachtree Media Advisors is partnering with Harpia Ventures to introduce investors to the Brazilian digital media space and showcase a pipeline of early and growth stage companies.  The following receptions are being held to provide venture capital and institutional investors with insight on the Brazilian digital media M&A marketplace:

March 16 in New York, NY at the Yale Club
March 18 in Boston, MA (location TBA)
March 22 in Redwood City, CA at the Sofitel San Francisco Bay

The receptions will discuss economic growth prospects in Brazil; development and potential of the digital media sector, including successful mobile and internet-based models; successful models being replicated in the market; and ways to participate in the Brazilian digital media and technology pipeline.

INTRODUCTION TO BRAZIL

Against the backdrop of the recent global downturn, Brazil is emerging as an appealing market for investors. Though its economy, the largest in Latin America, was undoubtedly impacted by the downturn, Marciliano Freitas of Harpia Ventures observes that “Brazil’s GDP only decreased in 4Q08 and 1Q09, so the country experienced just two quarters of recession and year-over-year presented growth.” The Bovespa Index also climbed 82.7% in 2009—the highest of any stock market— amidst rising domestic consumption, political stability, and 5% annual economic growth, yet despite these gains, Brazilian stocks still trade at 12.9x forward earnings, compared with 19.1x in China and 18.4x in India.

This potential for growth, along with low labor costs—the average computer programmer makes $17,270 a year in Brazil versus $72,000 in the US—is attracting foreign entries into the Brazilian tech sector. Companies like Google, Yahoo, Microsoft, Facebook, ESPN, and Discovery have already established a presence in the region, while Infosys, Fatwire, and Razorfish each opened offices in the past year and IBM formed the Sao Paulo IBM Innovation Center in August to stimulate development of Brazilian technology.

Digital media companies, however, are not the only players seizing opportunities in Brazil. ABVCAP estimates that venture and private capital inflows from foreign investors have totaled $22 billion over the past five years, and a survey conducted by Coller Capital in April 2009 shows Brazil ranking as the second most attractive investment destination in the world behind China. Carlyle Group revealed plans in September for a heavy push into Brazil, citing macroeconomic stability and increased openness to private equity, following the inceptions of a $50 million fund by Intel Capital in 2006 and a $170 million fund by a partnership between Draper Fisher Jurvetson and a local firm in 2007.

Claudia Fan Munce, managing director of IBM Venture Capital Group, remarked during IBM’s Innovation Center announcement, “We have been watching Brazil for a while. The time is right.”

RSVP

To learn more about digital media investment opportunities in Brazil, please RSVP by March 1, 2010 to brazil@peachtreemediaadvisors.com.  Information will be sent out to pre-qualified attendees.  C-level venture capital and institutional investors are invited to attend; members of the press may also inquire.

Contact:
John Doyle
Managing Director and Founder
Peachtree Media Advisors, Inc.
johnd@peachtreemediaadvisors.com
Tel: (212) 570-1009


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The New Dishy Mix Interview

Friday, January 22nd, 2010 at 2:26 am

Below is a link to the 2nd Dishy Mix podcast interview with Susan Bratton and me regarding Digital Media M&A.

http://blogs.personallifemedia.com/dishymix/

Look for DM 136 podcast: John Doyle.

It’s always fun to speak with Susan and we decided to make this an annual conversation.  Enjoy!

Best,

John


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