Peach Tree Introduction 2008

2008
Introduction
to
PEACHTREE MEDIA ADVISORS, INC.
PEACHTREE MEDIA ADVISORS, INC.
Discussion
I. About Peachtree Media Advisors, Inc.
II. Out-of-home, New Media & Interactive Marketing Services
III. Public Market Company Valuations
IV. M&A Environment
V. Active Strategic Buyers & Investors
VI. The Peachtree Sale Process
2 PEACHTREE MEDIA ADVISORS, INC.
About Peachtree
About Peachtree
Peachtree provides investment banking services on growth and smaller middle

market transactions in the media and information industries
Over 20 completed transactions
Focus on maximizing value at each stage of the process
Substantial insight in core industry markets – 10+ years of media industry focus
Senior level access to leading industry executives, investors and entrepreneurs
In-depth technical and financial skills for value-enhancing deal structuring
Insight
Position
Passion
About Peachtree Services

Capital Raise –– Peachtree
CapitalRaise Peachtreehas
hasaasubstantial
substantialamount
amountofofexperience
experiencehelping
helpingmedia
media
companies raise growth and acquisition financing from venture capital and private
companies raise growth and acquisition financing from venture capital and private
equity
equityfirms;
firms;

Mergers
Mergersand Acquisitions –– Peachtree
andAcquisitions Peachtreemaximizes
maximizesvalue
valuefor
forsell
sellside
sideclients
clientsas
aswell
well
as
asstrategic
strategicand
andfinancial
financialbuyers
buyersseeking
seekingadd-on
add-onor
orplatform
platformacquisitions;
acquisitions;

Sales
Salesand Divestitures –– Peachtree
andDivestitures Peachtreemaximizes
maximizesvalue
valueon
onthe
thesale
saleofofproperties
propertiesor
orthe
the
divestiture
divestitureofofnon-strategic
non-strategicassets
assetsthrough
throughaacontrolled
controlledauction
auctionprocess;
process;
Valuations –– Peachtree
Valuations Peachtreehas hasthe
theability
abilitytotocombine
combineoperational
operationalinsight,
insight,market
markettrends
trends
and
andtechnical
technicalanalysis
analysis inindetermining
determiningthorough
thoroughand
andwell-documented
well-documentedvaluations;
valuations;and
and

Strategic
StrategicPartner/Business Development –– With
Partner/BusinessDevelopment Withunprecedented
unprecedentedinsight
insightinto
intoend
end
user
userneeds,
needs,ananability
abilitytotonavigate
navigateniche
nichemarkets
marketsand
andanalyze
analyzerevenue
revenuemodels,
models,
Peachtree
Peachtree is able to assist lower-middle market companies in developingstrategic
is able to assist lower-middle market companies in developing strategic
relationships
relationshipsininorder
ordertotodrive
driverevenue
revenuegrowth.
growth.
Primary Peachtree Sectors
New Media, Out-of-Home & Interactive Marketing Services
Search/
Analytics/ Business
Out-of-Home Ad Serving Services Consumer Commerce
• Alternative • Search • B2B • Social Networking • Transactions/

Media Auctions
• Ad Serving • Ad Networks • Photos/Sharing
• Ambient &Technology • Travel/Rental/
• Agency/SEM/SEO • Blogs/User
Housing
• Billboards • Web Analytics/ Generated Content
• Lead
CMS • Jobs/
• Digital Signage Gen/Customer • Online Publishing
Classifieds
• Web Applications Acquisition
• In-store/Point- • Aggregator
• E-commerce/
of-Purchase • Enabling/IT • Interactive
• Ad Supported Comparison
Marketing Services
• Transit Shopping
• Video
• Online Games
Select Transactions
Seller Buyer Client Sector

AdSpace Networks The Walnut Group and current investors $20 million equity raise series E; alternative digital out-of-home advertising
The Governance Institute National Research Corp. Best practices research and peer-to-peer benchmarking data
AdSpace Networks Steelpoint Capital and current investors $20 million equity raise series D; alternative digital out-of-home advertising
Spin Magazine McEvoy Group Consumer lifestyle magazine, alternative, youth, music, early adopter
Vibe Magazine The Wicks Group of Companies Consumer lifestyle magazine, urban, youth, music, early adopter
iMedia Communications dmg world media Interactive advertising conference and online content provider
INFORMEX United Business Media/CMP Chemicals industry tradeshow
Blood-Horse Publications Valuation Enthusiast publishing - thoroughbred racing industry
ASI (Advertising Specialty Institute) Valuation Marketing and advertising promotional services
Sundance Publishing Haights Cross Communications Educational publishing
StockVal Automatic Data Processing Fundamental historical stock pricing data
Strategic Legal Resources Staff Mark Professional legal temporary and permanent staffing agency
The Practice Builder Organization Medical World Communications Business information services and medical professional education
i-traffic Agency.com Internet direct marketing/advertising agency
Entertainment Publications (a
The Carlyle Group Marketing and information services (local coupon books)
Cendant subsidiary)
HCIA Datis VSS Communications Partners Benchmarking healthcare clinical information data
*Client in blue.
New Media & Interactive Marketing Services
Shift in Advertising Spending from Traditional to Interactive
U.S. online advertising spending is expected to approach $19.5 billion in

2007, according to eMarketer
Search remains the dominant marketing category
17% CAGR
from
2007 to 2011
Source: eMarketer, February, 2007.
Ad Spending Moves Downstream: The Long Tail Effect
The effects that cable television had on broadcast TV are the same effects
that niche Web sites are having on the large portals…sites developing niche
content are increasingly attracting loyal and devoted audiences
Social networking and

user-generated content
sites are increasing their
share of the online
marketing mix
¾ Growth in niche
environments
¾ Ad spending on U.S.
social-networking sites
to reach $2.15 billion
by 2010
Source: eMarketer.
Place based media/digital signage
Digital out-of-home companies are at the intersection of several important

trends
¾ Shift from traditional to alternative media channels
¾ Shift from static to digital media
¾ Increasing advertiser awareness in the power of the retail environment
¾ Increasing need for mass reach media vehicles with local targeting capabilities
out-of-home represents a substantial roll-up opportunity still
Place-based advertising represents a substantial growth area for advertisers
and marketers
Targeted lifestyle destinations through narrow-casting
¾ Consumer leisure destinations
¾ Bars and restaurants
¾ Spas and gyms
¾ Movie theaters, parks and family entertainment centers
New out‐of‐home/narrowcast networks reach “on the go” consumers
Television
Newspaper/
Magazines Theaters
Billboards
Malls/Stores
Generate
Awareness
Drive Interest Impact Sales

Out Out of Home
of Home - $5.1B
Radio - Radio
$17.9B Malls
Cinema - $0.350B
Retail
Malls - $0.200B
Super Markets
Arbitron Study, March 2004

New & Alternative Media
M&A Environment
The current M&A environment is placing a premium on size
It was a seller’s market

¾ Due to the current land grab, interactive marketing services valuations increased
in 2006 to 2007; toward the end of 2007 valuations subsided
¾ The floor had moved to 16x TTM EBITDA and, in some cases, valuations reached
36x EBITDA
WPP acquired 24/7 for $649mm…that’s 36x EBITDA
Microsoft just bought aQuantive for more than 10x revenue and more than 45x
EBITDA...approx. 13x revenue and 50x EBITDA
ValueClick acquired comparison shopping site MeziMedia ($40M in revenue in 2006 and
160 employees) for $100 million in cash, plus earn out (approx. $352 million in cash)
It is a strategic buyer’s market

¾ Online media valuations across the board have decreased
¾ There is a clear disconnect with valuation expectations today and where they were
at one year ago
¾ Sellers refuse to sell at current valuation multiples
¾ Strategic buyers with scale are happy to buy at last year multiples…less upward
pricing pressure…easier to get a deal done
What this means for New Media/Internet Sellers
Interactive marketing services valuations are still trending upward

Middle-tier companies with venture capital backing are going to be on an
acquisition tear in order to scale…size matters
Recent acquisitions clearly put a premium on EBITDA and ad serving
technology
It is also a good time to raise venture capital
¾ Venture capital fear/competition will begin to play a factor in increasing
valuations…”use it or lose it”
Many have stayed on the sidelines with a 7 to 10 year investment time horizons
Returning un-invested money is not a good business practice and does not bode well for
raising another fund
¾ The problem is that VCs will care more about the enabling technology/ad serving
side of the business and less about the media buying
The M&A market is about to heat up as lower/middle-market companies seek
out EBITDA growth through acquisition to rapidly scale their operations and,
subsequently, their valuations
What this means for Alternative/Out‐of‐Home Media Sellers
Although investors are becoming more comfortable with alternative media,

they are seeking out proven revenue generators
¾ Outdoor is considered “traditional” in the alternative out-of-home media sector
¾ Much more difficult for early stage OOH companies to raise venture capital $
Recent OOH Transactions
¾ National Cinemedia IPO
¾ Brite Media Group acquires AdverTickets
¾ ClearChannel going Private
¾ Adapt Media receives additional funding from Dolphin Equity
¾ Reactrix receives $45 million in additional funding
Many venture capital firms continue to stand on the out-of-home sidelines
¾ VCs understand the ability of digital signage to lower fulfillment costs substantially
by disseminating creative from one central location (higher margins)
¾ VCs are cautious about burning through capital to build digital networks
There are several carcasses on the side of the road
“If you build it, they will come” is not enough proof of concept
Pros & Cons (Strategic vs. Private Equity/Venture Capital)
Strategic Acquirer Pros Private Equity/VC Pros

¾ Achieve highest valuation possible ¾ Participate in upside (5-7 years)
¾ Ability to structure an earn-out ¾ Be a consolidator and not a “consolidatee”
¾ Sell on forward earnings ¾ Maintain autonomy and control*
¾ Accept paper as well as cash ¾ Answer only to your Board of
consideration at Closing Directors/Investors
¾ Leverage buyer’s sales and operational ¾ Take some chips off the table
infrastructures
Strategic Acquirer Cons Private Equity/VC Cons

¾ Having someone to report to ¾ Lower valuation
¾ Sticking to a rigid budget ¾ May be difficult to change course (PE/VC
¾ Potential personality conflicts between firms do not speak the language of the
employees (“we own you”) landscape as well as Strategic Buyer)
¾ Potential loss of corporate identity ¾ Typically unfavorable deal structures when

timeframe is more than 7 years
¾ *Preferred shares that Pay-In-Kind or
interest rate is more shares instead of cash
resulting in loss of control
Determining & Maximizing Valuation
How do you value a digital or new media company?
Technology Media
Multiples Multiples
Dynamic Relevant &

Digital
And Engaging
Technology
Compelling Content
New
Media
Formats
Software &
Technology Media World
World
In many cases, the traditional ways of determining value fall short
Comparable private M&A transactions

Public market company valuations
Discounted cash flow analysis
Unfortunately, value is in the eye of the buyer
Most transactions in new media are not

¾ Comparable private M&A transactions comparable, each deal has its own unique
attributes
Public companies are generally larger, more

¾ Public market company valuations established entities that have diversified
revenue streams across several media sectors
Expansion = Capex
¾ Discounted cash flow analysis
Growth = Investment in Staff & Marketing
Both lower cash flow
Driving or maximizing the value of your company in a capital raise
Investors look for long-term expansion contracts (OOH) and repeat

customers (Digital Media)
¾ Money is put to work sooner rather than later
¾ Functional network operating centers (OOH)
¾ Working and scalable infrastructure
¾ Proven and capable management teams
¾ Profitable business model (or soon to be profitable)
¾ Strong exit
Strategic buyers seek profitable businesses with national networks (OOH) or
recurring revenue base (Digital Media)
¾ Ability to take them in a different direction (complementary product offering)
¾ Leverage their existing infrastructure (back-office accounting, sales & marketing)
¾ Pump their products through your existing sales channels
¾ Bring technical capabilities that you posses to their business
¾ Believe that they can do what you do, better and faster, but want your footprint
¾ Are tired of competing with you
Maximizing the value of your company through the sale process
If your business is profitable, has a long-term contracts (OOH) and has recurring
revenue generated from many customers – (Digital Media)
¾ Expect 3x – 5x revenue and 8x – 12x EBITDA (Out-of-Home)
¾ Expect 5x – 10x revenue and 16x – 40x EBITDA (Digital Media)
¾ Based on current market conditions and private market transaction multiples in the
following media sectors
Out of home, interactive marketing services and interactive advertising
¾ A sale process helps to deliver maximum value

If your business does not make money and you are looking to raise more capital,
then you will need a
¾ Compelling growth story
¾ Proof of concept, the best proof is recurring revenue
¾ Attainable forecast with reasonable assumptions (a bullet-proof operating model)
¾ Discussions with multiple Venture Capital/private equity firms
A sale process helps companies raising capital maximize value by negotiating with
more than one potential investor at the same time
Active Strategic Buyers & Investors
Maximizing the value of your company for a financial or strategic buyer
Strategic buyers seek to acquire at least one of the following:

¾ Growing businesses
¾ New technology
¾ Customer base - ability to sell their products to your customers
¾ Product/media channel - leveraging their sales infrastructure to secure more of
their current advertisers’ marketing budgets
¾ The key to maximizing value is to find the potential acquirer that will gain
the most from owning your business
Financial investors seek to manage their risk by investing in companies with
¾ Proven management teams
¾ Existing customers
¾ Clear problem solved or defined need
¾ Large and growing addressable market
¾ Scalable business models
¾ The key to maximizing value is to be in multiple discussions with investors
that specialize/target investment opportunities in your sector
The Peachtree Sale Process
The five primary phases (4 to 6 month process)
Information memorandum
Marketing/expressions of interest
Management presentations
Due diligence/letter of intent
Final negotiations/close
Information memorandum – Month 1
Initial information request

Develop strategic positioning
¾ Most compelling investment merits
¾ Highlight buyer interests
Create information memorandum
¾ Exec Summary
¾ Investment Merits
¾ Market Served
¾ Products & Services
¾ Operations
¾ Growth Opportunities
¾ Finance
¾ Management & Organization
Buyer target list
Marketing/expressions of interest – Months 2 and 3
Initial contact with senior level

decision makers
Non-disclosure agreement
Dissemination of information
memorandum
Process letter requesting non-
binding expression of interest
¾ Terms
¾ Initial valuation
¾ Preliminary deal structure
¾ Source of capital
Review bids
Management presentations – Month 4
Select/invite prospects to go to the next

round
Management presentation
¾ An informative presentation given by
management to select bidders
Q&A session
Discussion of process and next steps
Second round process letter sent to
management presentation attendees
¾ Request for Letter of Intent (LOI)
¾ Terms of deal structure
¾ Indicate initial terms of purchase and
sale agreement
¾ Bidder proposed capital structure
Due Diligence – Month 5
Due diligence
¾ Continued discussion with
management via conference call
¾ Extensive review of data room,
legal documents, agreements and
operating contracts
Letter of Intent/Final Negotiation/Closing – Month 6
Review of LOIs
Comparison of final bids
Final negotiations with top bidders
Choosing the final bidder
Confirmatory due diligence
Closing
Peachtree Transaction Process
Peachtree Marketing Strategy
The Positioning Perform comprehensive review of company to achieve optimal

positioning with prospective buyers
Information Memorandum Information request gathers key data on the company

to help prepare offering document as well as begin preparation for due
diligence/data room
¾ High-quality Information Memorandum tells a compelling story and gives just

enough information for prospects to submit an Indication of Interest
Prospective Buyer Pool Seller will benefit from the “wide net” auction process
¾ Many strategic and financial buyers are not on the sellers’ radar screen at the
start of the process
Peachtree Transaction Process
Peachtree Marketing Strategy (cont’d)
The Approach All contacts and relationships are at the decision making level.
¾ Peachtree uses its expertise and insider knowledge to best position the business
¾ Prospective buyers will be contacted telephonically
Build and Maintain Momentum Peachtree will create strong momentum and
enthusiasm for the acquisition, which will help maximize value
Well-orchestrated Due Diligence Phase Peachtree will help the client develop an
effective and efficient due diligence data room in order to minimize time to close
Negotiating a Tight Purchase Agreement Peachtree will assist company’s legal

advisors in negotiating the purchase agreement, drawing upon substantial experience
in negotiating Terms with buyers and their legal counsels
About John Doyle
Established by John Doyle, Peachtree Media Advisors, Inc. serves the out-of-home,
interactive/digital, agency and marketing services sectors of media. Mr. Doyle has
more than ten years of media investment banking experience, having worked as a
senior level investment banker at Veronis Suhler Stevenson and The Jordan, Edmiston
Group, Inc.
After graduating from Dartmouth College In 1995 with a double major of Engineering
and Economics, Mr. Doyle specialized in business information services and specialty
media and marketing services at Veronis Suhler Stevenson (VSS). While at VSS, Mr.
Doyle performed M&A advisory services to sell-side and buy-side clients, in addition to
developing platform acquisition strategies, performing leveraged buy out analysis and
conducting due diligence for the VSS private equity funds.
In 2000, Mr. Doyle successfully launched a digital production company in Los Angeles, CA,
developing both online and offline digital content. In 2001, the company transitioned to focusing
solely on raising money for offline film and television projects. Mr. Doyle has worked with Conde
Nast, Fox Cable Networks, 20th Century Fox, Writers & Artists Agency and Revolution Studios.
In 2004, Mr. Doyle returned to media investment banking with The Jordan, Edmiston Group, Inc.
His primary responsibilities included developing qualitative and quantitative analytical materials at
each phase of the M&A transaction process. Highly experienced in valuing, analyzing and
positioning media businesses, Mr. Doyle was responsible for closing more than ten media M&A
transactions.
Peachtree Media Advisors, Inc. was established to serve the merger and acquisition advisory
needs of the specialty media and marketing services sectors. With a substantial amount of media
operations and investment banking experience, Mr. Doyle is able to deliver expert advice in valuing
media assets, positioning companies during the sale process, developing information memoranda
to send to potential buyers, coaching management through presentations, developing bids/deal
structure analysis and managing the due diligence process to closing.
Industry Relationships
Peachtree Media Advisors, Inc.
January 2008
50 Vanderbilt Ave., #30

New York, NY 10017
T: (212) 570-1009
F: (646) 607-1786
www.PeachtreeMediaAdvisors.com
▪
JohnD@PeachtreeMediaAdvisors.com

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2008

I. About Peachtree Media Advisors, Inc.

II. Out-of-home, New Media & Interactive Marketing Services

III. Public Market Company Valuations

IV. M&A Environment

V. Active Strategic Buyers & Investors

VI. The Peachtree Sale Process

Peachtree provides investment banking services on growth and smaller middle

 Over 20 completed transactions

 Focus on maximizing value at each stage of the process

 Senior level access to leading industry executives, investors and entrepreneurs

 In-depth technical and financial skills for value-enhancing deal structuring

New Media, Out-of-Home & Interactive Marketing Services

• Alternative • Search • B2B • Social Networking • Transactions/

Seller Buyer Client Sector

INFORMEX United Business Media/CMP Chemicals industry tradeshow

Blood-Horse Publications Valuation Enthusiast publishing - thoroughbred racing industry

Sundance Publishing Haights Cross Communications Educational publishing

StockVal Automatic Data Processing Fundamental historical stock pricing data

i-traffic Agency.com Internet direct marketing/advertising agency

 U.S. online advertising spending is expected to approach $19.5 billion in

 Social networking and

 Digital out-of-home companies are at the intersection of several important

Drive Interest Impact Sales

Arbitron Study, March 2004

 It was a seller’s market

 It is a strategic buyer’s market

 Interactive marketing services valuations are still trending upward

 Although investors are becoming more comfortable with alternative media,

 Strategic Acquirer Pros  Private Equity/VC Pros

 Strategic Acquirer Cons  Private Equity/VC Cons

¾ Potential loss of corporate identity ¾ Typically unfavorable deal structures when

Dynamic Relevant &

 Comparable private M&A transactions

 Unfortunately, value is in the eye of the buyer

Most transactions in new media are not

Public companies are generally larger, more

 Investors look for long-term expansion contracts (OOH) and repeat

¾ A sale process helps to deliver maximum value

 Strategic buyers seek to acquire at least one of the following:

Due diligence/letter of intent

 Initial information request

 Initial contact with senior level

 Select/invite prospects to go to the next

Peachtree Marketing Strategy

 The Positioning Perform comprehensive review of company to achieve optimal

 Information Memorandum Information request gathers key data on the company

¾ High-quality Information Memorandum tells a compelling story and gives just

Peachtree Marketing Strategy (cont’d)

¾ Prospective buyers will be contacted telephonically

 Negotiating a Tight Purchase Agreement Peachtree will assist company’s legal

50 Vanderbilt Ave., #30

Vous aimerez peut-être aussi

Over 20 completed transactions

Focus on maximizing value at each stage of the process

Senior level access to leading industry executives, investors and entrepreneurs

In-depth technical and financial skills for value-enhancing deal structuring

U.S. online advertising spending is expected to approach $19.5 billion in

Social networking and

Digital out-of-home companies are at the intersection of several important

It was a seller’s market

It is a strategic buyer’s market

Interactive marketing services valuations are still trending upward

Although investors are becoming more comfortable with alternative media,

Strategic Acquirer Pros Private Equity/VC Pros

Strategic Acquirer Cons Private Equity/VC Cons

Comparable private M&A transactions

Unfortunately, value is in the eye of the buyer

Investors look for long-term expansion contracts (OOH) and repeat

Strategic buyers seek to acquire at least one of the following:

Initial information request

Initial contact with senior level

Select/invite prospects to go to the next

The Positioning Perform comprehensive review of company to achieve optimal

Information Memorandum Information request gathers key data on the company

Negotiating a Tight Purchase Agreement Peachtree will assist company’s legal