With Kalil & Co. handling the recently closed MH Outdoor, New South transaction, we talked with Max Drachman about the 2019 M&A market and beyond.
Max, what trends are you seeing in the M&A market?
It has been more of the same for the last few years. The industry is in a really good place and valuations reflect that. We’ve had another strong year, and have recently closed a few fairly exciting deals:
- New South’s divestiture in Auburn, AL to MH Outdoor
- Neil Bell Of New South has been around a long time and is widely regarded for his development talent. He was able to perform a digital buildout in Auburn/Opelika, Alabama and put together some spectacular locations in a great college market. While these assets were highly sought after, MH Outdoor ended up being the buyer. MH Outdoor is a quickly growing independent based in Houston and looks forward to adding these assets to their portfolio. New South still owns assets in Huntsville and Decatur, Alabama.
- Lindmark’s acquisition of Fairway’s SW Division
- We were very happy to assist Lindmark with this transaction. Their CEO, Trent Lindmark, is an industry vet with decades of experience. Lindmark added over 3,000 faces in this deal, which fortified their position in Oklahoma and expands their territory into Arkansas and North Texas. They now have over 5,000 faces and are one of the largest independent Outdoor companies in the country. The current plant started with limited organic development and an acquisition of Blue Sky Outdoor, and through several dozen acquisitions and continued development, it now stretches over 1,000 miles east to west. While it may take a few months to digest this inventory, I have a feeling there will be more announcements from Lindmark before long.
- Veale Outdoor’s acquisition of TKG in Northern California
- Veale Outdoor is a portfolio of excellent locations in Northern California. They have been looking for acquisition opportunities in their area and engaged us to beat the bushes to help them grow. We targeted about 100 different sign owners, and ended up focusing on TKG. TKG had outstanding structures on I-80 between San Francisco and Sacramento and had recently engaged Gabe Oliverio at JFC. The Veale team (Kirk Veale, Tom Jackson, and Clem Carinalli) is first class and we were able to secure the deal by moving quickly.
- Headrick Outdoor’s divestiture of structures in Oklahoma City to Griffin Outdoor
- We have a longstanding relationship with both parties involved in this deal. On the Headrick side, we’ve done many deals with them on the buy and sell side, and believe Richard Headrick is not only an Outdoor pro, but an amazing guy. He used the proceeds from this sale to fund his foundation Hellfighters USA in Laurel, Mississippi. Griffin is a large media company focused exclusively on Oklahoma. We have worked with them for decades, and just last year sold them the E.W. Scripps radio stations in Tulsa. They are growing their digital Outdoor presence in Oklahoma City and Tulsa, and the Headrick deal was a natural fit for them.
Are there any new players out there?
There seems to be a new buyer in this space every week. We are getting calls from PE shops, family offices, former owners looking to get back in, etc. Everybody seems to be bullish on Outdoor right now. As you know, we got American Tower into Outdoor last year, and I believe they followed that acquisition with a small tuck-in or two. They were just the latest of a long line of new entrants we have brought into the space.
How does 2019 compare to 2018 for Kalil, and do you have any perspective into 2020?
2019 has been a great year for us. The Waitt and Key deals that went to Link last year for $120,000,000, along with the other 11 transactions we closed, really boosted our overall deal volume. That said, we are going to get pretty close to last year. It’s hard to judge 2020 at this point, but based on the bullishness around this space, and the significant amount of cheap money that is available, 2020 could very well be our best year ever.
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