The mergers and acquisitions market for Internet marketing firms, database marketing/CRM and experiential marketing companies is expected to be strong in 2006, according to a survey by AdMedia Partners, Inc.
In its 12th annual survey of executives, the New York City-based investment banking firm found that 79% were most bullish about M&A activity in the interactive marketing field.
“I think the biggest change we’ve noted is that there is a strong expectation that there will be a much higher level of activity in categories like interactive, direct and experiential marketing which we have not seen for quite a while,” said Abe Jones, managing director at AdMedia.
Companies spending more on marketing and the demise of the 30-second spot were cited as reasons for the expected soar in M&A activity, Jones said.
Forty-two percent of marketing companies planning to sell all or part of their business plan to do so this year, a 17% jump over last year, with 54% planning to complete an acquisition during the year, up from 51%.
But when buyers approach the market, they may be sticker shocked.
Respondents expect the price, especially for Internet marketing firms, to jump 6 to 10 times pretax profits, up from 5 to 7 last year. Other sectors were expected to remain the same at 5 to 6 times pretax profits.
“The reason [for the strong market] is that there’s been a pent up demand for acquisitions of major communication companies by companies who were more conservative in buying in prior years and who put it off until the market turned and spending came back,” Jones said.
AdMedia sent the survey to 3,200 executives but did not disclose the number of respondents.
