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Acquisitive vs. Organic Growth

September 13th, 2010 8:07PM by Brendon Kensel

Digital media and marketing companies have slogged through the recession and are now hoping to see a rebound in 2011. While there is still macro-economic uncertainty, trends in the digital media and marketing sectors are moving in the right direction. Next year marketing expenditures on digital and online media in the U.S. is expected to surpass the marketing budget allocated to print for the first time.

As senior executives at digital media and marketing companies begin to plan their corporate strategy for 2011 many are trying to determine the right growth strategy — acquisitive or organic. Many CEO’s are now recognizing that their optimal corporate growth strategy will likely include a combination of acquisitive and organic growth. While most companies in the media and marketing sectors have been growing organically, now may be a good time to accelerate growth through acquisitions.

Successful corporate strategies incorporate organic growth fostered by the pursuit of operational and financial strategies along with select acquisitions that dovetail to the company’s key strengths. Executives that decide to pursue acquisitions should be able to identify the strategic reasons why they want to acquire a particular target.

The primary drivers of an acquisition typically include one or more of the following: a) acquire new distribution channel/customers; b) acquire key technology; c) expand or add a product line; d) gain executive/technical/creative talent; e) gain expertise and entry in a new market; f) gain a time-to-market advantage; and/or g) increase profitability.

Ultimately, acquisitions are made because companies believe it is a more effective means of meeting a strategic need and increasing shareholder value than organic growth. While any of the above attribute will enhance value, capturing proprietary technology or products with a significant competitive advantage, or gaining market leadership in a fast-growing market segment can dramatically enhance value. The merger and acquisition market in the media and marketing services sector has been brisk this year. Recent examples include:

In June GSI Commerce (NASDAQ: GSIC) acquired FetchBack, an advertising startup that specialized in retargeting, for about $40 million according to reports. This acquisition is very complimentary to GSI’s other marketing service offerings since retargeting will allow GSI to drive customers back to their clients’ websites.

Broadcaster and publisher Meredith Corp. (NYSE: MDP) acquired mobile agency The Hyperfactory in July. This acquisition provides Meredith with a strong mobile foothold and enhances its marketing services group.

Google (NASDAQ: GOOG) acquired social applications developer Slide for $182 million in August. The acquisition gives Google a seasoned team that knows social, something Google is working diligently to get right.

This month blog network Glam Media acquired German men’s online media company Fantastic Zero. This acquisition expands Glam’s efforts to reach males and will help broaden its overall demographic and geographic reach.

To further fuel your creative M&A juices check additional deals at CruchBase.

High Performance in Business & Sports Panel Discussion

April 25th, 2009 12:03PM by Brendon Kensel
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From left to right: Brendon Kensel, Managing Partner of Kensel & Co.; Kyle Sherman, EVP of Advertising & Sales of Fox Sports Network; David Meltzer, COO of Leigh Steinberg Sports & Entertainment; Ed Arnold, anchor at KOCE-TV; Dennis Kuhl, President of the Los Angeles Angels of Anaheim; and Bob Wagner, CMO of the Anaheim Ducks & Honda Center.

In February I chaired a panel focused on high performance in business and sports that was hosted by Pepperdine’s Graziadio Alumni Network of Orange County. The panelists included: Dennis Kuhl, President of the Los Angeles Angels of Anaheim; Bob Wagner, CMO of the Anaheim Ducks & Honda Center; Kyle Sherman, EVP of Advertising & Sales of Fox Sports Network; and David Meltzer, COO of Leigh Steinberg Sports & Entertainment. The panel was moderated by Ed Arnold, anchor at KOCE-TV and longtime sportscaster for KTLA-TV and KABC-TV in Los Angeles.

Dennis Kuhl discussed his philosophy on building a winning organization – a topic he knows well having participated in the Angels playoff run that resulted in winning the MLB World Series in 2002. Bob Wagner also shared insights on building a high-performing unit. The Anaheim Ducks won the Stanley Cup in 2007. These two panelists also discussed cultivating sports fans in Southern California, navigating attendance challenges in a down economy, and their paths into pro sports leadership roles.

Kyle Sherman discussed the advertising environment and working with franchises to create authentic sports content and experiences for local fan bases. David Meltzer described working with mega-agent Leigh Steinberg and the rapidly changing world of athlete representation.

Ed Arnold, a veteran sportscaster, said it best when discussing maintaining performance, “hire winners and you will keep winning.”

Note to Digital Agencies: Strategy First

November 2nd, 2008 10:13AM by Ronald Wagner

After having advised several clients seeking to acquire digital agencies I have seen a desire among buyers to pursue firms with strong strategic capabilities. For an acquirer, the advantages inherent to companies that offer digital strategy capabilities include a higher-level client relationship, higher margin revenues, an ongoing stream of new business opportunities created via strategic recommendations, and of course, smart talent. I’ve previously built such a “digital strategy” group and core offering at two different interactive marketing firms to date (blatantly changing one company’s tag-line from “digital marketing services” to “digital marketing strategy and services” to reflect the clear forward focus on strategic partnering with clients), and therein bore witness firsthand to that empowering element, which is now more centrally a decision-turning factor among acquirers in the digital marketing services space.

Welcome

November 1st, 2008 12:50PM by Brendon Kensel

Welcome to the Kensel & Co. blog. This blog will provide insights and analysis on mergers and acquisitions, private equity investments, venture capital, business strategy, and emerging trends in the media, marketing and technology industries. The authors bring a wide range of expertise on these subjects and I encourage you to visit this site regularly for recent posts.