Key Considerations in Media and Marketing M&A Transactions
Posted July 25, 2018 in Articles
In the media and marketing industries, assessing the value of a merger or acquisition requires a thorough assessment of numerous factors. From brand recognition and market reputation to employment-related considerations and the feasibility of technological integration, making a sound decision requires the ability to critically assess all aspects and implications of the deal.
While there are various considerations that are relevant to any type of merger or acquisition transaction, there are a number of considerations that are unique to the media and marketing industries as well. Here are five key aspects of media and marketing deals that can significantly impact the value to the purchaser:
1. Leadership and Creative Personnel
Leadership and creative personnel play a central role in the success of media companies and marketing agencies. Key questions that should be answered at the outset include: Whether key executives and employees will stay on through the acquisition? Or, will your existing team take on expanded roles once you have acquired the target entity’s portfolio? If the former, it may be necessary to strategically negotiate employee retention and executive compensation agreements that ensure continuity following the acquisition.
2. Client Satisfaction
Keeping abreast of client sentiment is important when melding two companies into one. The transition team should be able to assess the client satisfaction by making the following determinations. How satisfied are the target company’s clients? Are they satisfied enough that they will weather the integration or transition? Or, could some of the target entity’s larger clients use the acquisition as an excuse to part ways? Much of the value in a media or marketing acquisition comes from the value of the target’s client base, and knowing what you can expect following the transaction will be key to making an informed decision.
3. Technology Integration
While there are industry-standard applications and hardware platforms for media and marketing design and project management, the chances that any two entities are using identical technology suites is slim. The technology integration process can be challenging and frustrating for employees of both companies (not to mention costly), and avoiding client impact requires careful execution of a strategic integration plan.
4. Contract Rights and Liabilities
From client agreements to software licenses and real estate leases, a merger or acquisition can easily implicate hundreds, if not thousands, of contracts. During the due diligence process, the acquiring entity will need to reach an adequate level of comfort that the target entity’s contracts both (i) provide the rights necessary to effect the transaction, and (ii) avoid exposure to unnecessary risks and liabilities.
5.Tangible and Intangible Assets
Another key aspect of placing appropriate value on an acquisition involves identifying the target entity’s tangible and intangible assets. This is often more difficult than it initially seems. From determining whether intellectual property (IP) rights belong to the target or its clients to evaluating the IP implications of software licenses, identifying the assets that are on the table is a key step in both stock purchases and asset acquisitions.
Contact the Global M&A Consultants at Mithras Investments
Mithras Investments provides strategic consulting services for media and marketing M&A transactions in the U.S. and worldwide. From due diligence to executive compensation negotiations, we assist our clients with all aspects of complex mergers and acquisitions. For more information about our services, please call (305) 517-7911 or inquire online today.