Putting the brakes on M&As? Not for the long tail...

The ongoing credit crunch and mortgage mess have filtered down into parts of the banking industry that lend directly to media companies or finance media transactions. Despite the challenges, b-to-b media deals will continue to get done in 2008. It's not going to be a fallow period.

The media and information M&A market last year saw 838 transactions with a combined value of nearly $110.0 billion, up 32% and 79%, respectively, from 2006, according to a report by Jordan, Edmiston. The online media and marketing services sectors led the charge in 2007 with a combined 555 transactions valued at $43.0 billion.

Private equity companies have fueled many of the major b-to-b media transactions, such as Veronis Suhler Stevenson's acquisition last March of Advanstar Communications for $1.2 billion. However, the biggest media deal of 2007 was executed by a strategic player—News Corp.'s $5.6 billion acquisition of Dow Jones & Co.

With private equity companies struggling with their exposure to the current banking woes, strategic b-to-b media companies may loom large on the M&A front this year.

Reed Business Information made a big splash in the industry in December 2006 when it acquired lead generation company BuyerZone, which links prospective buyers to qualified suppliers in more than 134 business product and service categories. The deal could be a harbinger for business publishers that want to move aggressively online.

It brings buyers and sellers together to another level. But let me tell you, there are not a lot of BuyerZones out there. Reed Business continues to be in an acquisitive mode. For strategic companies, the acquisition situation has been improving the past few months, but that's offset by a more worrying economic environment, and there's still some resistance to sensible pricing.

Smaller publishers face the same rising costs as large publishers but have fewer financial resources to deal with them.

It's a wonderful time to be a small publisher, with a lot of advantages if you can niche smartly. Smaller publishers—those with less than $50 million in annual revenue—comprise about 55% of b-to-b media companies.

Smaller publishers' ability to stay nimble is particularly valuable in the current climate. The velocity of clients' needs is accelerating, and it's incumbent upon business publishers to respond in kind.

Despite the ongoing weakness in the U.S. dollar, there are ample opportunities for business publishers to try and penetrate overseas markets. The emerging business class in the so-called BRIC countries (Brazil, Russia, India and China) hungers for b-to-b information and the attendant tools that business publishers can provide.

You have to be in it for the long-haul if you're investing overseas. Of course, having a legitimate Web site makes you an international publisher by default so you know how important overseas markets can be.

- Closet Digital Media Investment Banker