Mergers and acquisitions (M&A) activity in the professional and scholarly information markets has increased in recent years. There has been a rise in the number of start-ups concurrent with mature companies looking for new avenues for growth.
M&A requires deep market knowledge, financial acumen, and experience in M&A transactions. C&E Practice Lead, David Lamb, is an investment banker with decades of experience in the publishing industry, on transaction activities.
Work in mergers and acquisitions may involve both for-profit and not-for-profit organizations, as even a not-for-profit entity may seek to buy or sell a publication or a software tool. Our experience in working with not-for-profits, and understanding their governance processes, is particularly helpful in such transactions.
C&E works with clients on divestitures as well as acquisitions. We work with clients on transactions that involve entire companies or just specific products. We also help private equity firms analyze companies they are considering funding and advise start-ups on financing options.
Buy-side Advisory Arrangements (Acquisitions)
C&E represents organizations seeking to acquire assets. These might include journals, book portfolios, software products, or entire companies. All such assignments begin with a valuation and proceed to an assessment of issues to be taken into account (e.g., an assessment of liabilities and integration risks) and a strategy for negotiations. In some instances C&E directly negotiates on behalf of the client; in others C&E remains in the background as advisers. As an aspect of negotiations, C&E may perform due diligence to ensure that the desired property has been properly represented by the selling party and has the proper characteristics for the client’s strategy.
Sell-side Advisory Arrangements (Divestitures)
Organizations seeking to sell an asset retain C&E to serve as its agent. In such an engagement, we begin with a valuation in order to develop a strategy; the valuation is accompanied by a focused environmental scan (“what is the competition for this kind of asset?”). Working closely with the client management, C&E then prepares an offering memorandum, which summarizes the asset in question, the nature of its current ownership, and strategic implications for buyers to take into account. The offering memorandum is designed as a strong selling document. Prior to issuing the offering memorandum to prospective suitors, we create a list of prospective acquirers (approved by the client) and sends out query letters. As bids come in, C&E assists the client in review of offers and designates a small group of finalists. We also assist in the setting up of the client data room, an essential part of buyers’ due diligence. C&E further advises on the negotiations and terms of the final agreement.
Market Mapping
As an aspect of their strategic planning, organizations may seek to understand whether a carefully targeted acquisition could fill a hole in the planning roadmap. (Conversely, sometimes a disciplined divestiture, in whole or in part, can enhance an asset’s value by putting it under the management of an organization better suited to optimize it.) In such situations C&E creates a map of the overall market and identifies entities that would make for strategically useful acquisitions. Such scans include the names of properties and organizations, a summary of their characteristics, and, where information is publicly available, a high-level estimate of value. We recommend that organizations engage in a scan of this kind before undertaking any large internal development projects, as sometimes assets and capabilities can be purchased or licensed more quickly at lower cost and reduced risk than for in-house development.