Operator, Investor and Advisor Profile Successful M&A

For the October 2016 M&A panel, ACG Portland and D.A. Davidson brought together a group of industry veterans representing different sides of the deal to talk about the state of M&A today and what makes a successful deal. In case you missed it, here are some highlights.

The State of M&A

brad-gevurtzBrad Gevurtz, Managing Director Investment Banking for D.A. Davidson, kicked off the event with a brief overview of M&A activity in the country and the Northwest.

2015 was the industry’s biggest year ever, and while deal volume and size are still healthy in 2016, the industry has seen a decline in most categories this year. Gevurtz pointed out that some of the slowdown is to be expected after a record-breaking year like 2015.

Election year uncertainty and the slow global economy also bear some responsibility for the softness so far this year.

The bright spot in Gevurtz’s comments was reserved for Oregon. Oregon’s M&A activity is nearly on par with Washington’s for the first time, thanks to our state’s healthy and growing economic base in the consumer discretionary and technology sectors (favorites in M&A regionally and nationally).

Inside the Deal: Alpha Media Group

The three panelists discussed in detail the transactions they had done together founding and capitalizing Alpha Media, which began with just 6 stations in 2009 and has grown into a new network of 251 stations today.

On why he and his team would want to plunge into a saturated, mature industry, fighting new technologies with a growth strategy.

bob-proffittBob Proffitt, President and CEO of Alpha Media, LLC:

“Pandora is not profitable… They lost $169 million last year.”

“Radio is really only 30 to 40% concentrated… Every market is different.”

Proffitt said he doesn’t worry too much about the “background music” satellite channels that are hemorrhaging money. He described the way the company embraces social media as a tool rather than a threat with streaming, podcasts, and social media listener engagement.

Alpha Media leverages the company’s “Live and Local” strategy to take on less concentrated, second-tier cities. They embrace the quirky, local, differentiating bits of culture that resonate with listeners in order to demonstrate the company’s focus on local brand.

On what attracted Endeavor Capital to Alpha Media.

Mark Dorman, Managing Director of Endeavor Capital:

mark-dorman“The team. We were very impressed with Bob and the team. As middle market investors, you don’t often get the chance to work with the best in the industry.”

“2008 and 2009 was an opportunistic time to get back into the market (after the 2001 sale of Citadel Broadcasting).”

“It took a couple of years to find add-ons before sellers awoke to reality.”

“Citadel sold at 16 times trailing cash flow and we are now buying at six to seven.”

Dorman portrayed an effective cocktail of the best operating team: market timing, well-structured and adaptable capital, and patience waiting for the right opportunities and prices.

How Sellers Can Be Seen as Valuable

Brad Gevurtz:

“Barriers to entry, differentiated product or service, top line growth, margin, and an experienced management team”.

All of these need to be there to draw broad interest and command good multiples because at the end of the day:

“Buyers are numbers people.”

 

Want more opportunities to get an inside look at the M&A industry from leaders in the industry? Looking for opportunities to meet other M&A professionals? Visit ACG Portland’s website at www.acg.org/portland and see what’s coming up on our events calendar.