Buyers and sellers in what investment bankers Petsky Prunier describe as the Digital Content & Commerce market were active in 2007, closing 215 deals with an estimated transaction value of $7.5 billion. The number of transactions more than doubled from 101 in 2006, while the deal value more than tripled from $2.4 billion, Petsky Prunier reports.
Confirming that user-generated content and online social networking are among the hottest areas of the Internet, deals for such companies made up more than a third—77—of all deals in the segment last year, for a total of $2.1 billion. The number of user-generated content/social networking deals was up 130% over 2006’s 33 while the total value was up more than eight-fold from $256 million.
The median purchase price was 2.5 times revenue, although a few high-cost transactions pushed the average to 8 times revenue.
The commerce portion of the segment had 34 deals, made up of 26 online retailers and 8 comparison shopping sites, compared to 31 the prior year, 28 retailers and 3 comparison shopping sites. While transactions were up 10%, the value of the deals was up 3.5 times to $2.31 billion from $663 million.
“There was a flood of venture capital investments in this segment in 2007, as Internet content was seen as the next great frontier for media companies. While strategic acquisitions comprised only 40% of the total number of transactions, they accounted for 59% of transaction value,” Petsky Prunier reported.
The top 10 deals in the segment, with buyer, seller and value in millions, were:
- Providence Equity Partners, NexTag Inc., $830
- Fenway Partners Inc., 1-800 Contacts Inc., $358
- The Walt Disney Co., Club Penguin Inc., $350
- R.H. Donnelley Corp., Business.com Inc., $350
- eBay Inc., StubHub, $310
- Spectrum Equity Investors, The Generations Network, $300
- Fox Interactive Media Inc., Photobucket Inc., $250
- Microsoft Corp., Facebook.com, $240
- Idearc Inc., InfoSpace Online Business Directory, $225
- Comcast Corp., Fandango Inc., $200
In 2007, the total number of transactions in this segment more than doubled to 157 from 61. Median reported revenue multiples increased the most among four Marketing Sector segments in 2007—up 43% to 3 times.
In total for the four marketing sector areas that Petsky Prunier tracks—Digital Services, Direct & Database, Digital Content & Commerce and Marketing Technology—investors completed 758 transactions valued at $60.3 billion, with deals up 63% from 465 a year ago and value almost doubling from $32.6 billion.
The other two segments are Digital Services, where 225 transactions took place for $16.2 billion vs. 143 and $4.2 billion the year before, and Direct & Database Marketers, which recorded 161 transactions, the same as in 2006, worth $18.6 billion, down from $22.6 billion the year before.
The Digital Services Segment includes companies that provide ad networks and exchanges, online lead generation, mobile advertising, digital video, e-mail services and interactive agencies. The Direct & Database segment includes companies providing data and analytics, market research, call centers, loyalty programs, production and mailing services and direct marketing agencies.
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