h2 2020 | media talk
media talk | h2 2020
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GLOBAL M&A OVERVIEW
2020 was a year with little relief for many businesses, as the pandemic coiled itself around markets and intermittently constricted activity. But even if there is a bumpy road ahead to recovery, we can see now that there are certainly blooming pockets of optimism, and exciting opportunities ahead. Though the number of global media M&A deals declined by 30% year-on-year in 2020, the second half of the year saw stronger volumes return across the Asia-Pacific and US markets, with relative spikes in September and December. Contrary to some expectations, the pandemic has not led to a complete paradigm shift. Rather, it has simply accelerated existing long-term trends, which in fact should provide a measure of confidence from a strategic perspective. True, many sectors may be feeling the pressure to fast-track digital transformation, but these adjustments will remain relevant well beyond lockdown. In economic terms, the vast spending programmes and monetary policies now in play around the world are likely to keep interest rates at basement levels for some while yet – always a positive for investors.
To take one example, a consortium of investors led by Swiss venture capital firm Blue Horizon Corporation – and including Griffith Foods and PE backers Trustbridge Partners and EQT Partners – announced a USD $135 million investment in Livekindly. Focused on sustainable, cruelty-free health & beauty content, Livekindly has benefited from heightened consumer interest in environmentally-friendly products. The US began catching up significant ground in the second half of 2020. Deal volumes had diminished markedly in H1, but we saw a spurt of acquisitions targeting US-based companies in Q3 and Q4, and PE activity lifted investment in the mid- market. Crestview Partners, for example, set its sights on a future rebound for in- person events by committing USD $135 million to Viad Corp, an Arizona-based provider of event marketing services.
UNITED STATES In the US, President Joe Biden’s celebrity- studded inauguration bodes well for political stability after four rambunctious years, but it may not be so auspicious for all. The tech sector, for one, is likely to come under renewed anti-trust scrutiny, and the new administration looks ready to explore tax changes that could target capital gains. Both these developments could spur M&A activity: tax-rate increases could accelerate the completion of transactions, while corrective antitrust enforcement may force the divestiture of certain brands or assets. The US remained top of the list of regions for both targets and acquisitions in 2020. Though other geographies have become more active in the media sector, contributing to a slight fall in the US share of overall deals since 2018, its status as a global powerhouse remains undiminished. In 2020, 30% of global acquisitions targeted American companies, while 29% of global buy-side deals originated in the US. Deals led by American buyers fell by half (50%) in 2020 on the previous year, but deals targeting US companies fell by a relatively modest 30%, demonstrating the market’s persistent allure against even the most difficult of backdrops.
FIGURE 1: GLOBAL MEDIA M&A DEALS BY TOP TARGET REGION IN 2020
Middle East 1% Latin America 1% Africa 0.3%
Australasia 3%
Central and Eastern Europe 4%
Canada 5%
United States 31%
South Asia 5%
Uni ted Kingdom 8%
Western Europe 16%
Asia Pacific 26%
THE US STAYED TOP FOR DEAL SHARE WITH 31%, WHILE ASIA-PACIFIC PICKED UP SHARE ON 2019, ANDWESTERN EUROPE AND UK SAWTHEIR SHARES DECLINE.
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