• Max Drachman says the deal market is “incredibly strong.”

    The out of home deal market is “incredibly strong” says out of home investment banker Max Drachman on this week’s Billboard Insider podcast.  Max has more than 10 years experience in out of home dealmaking with Kalil & Co.

    Here are some highlights.

    Your firm Kalil is also a large Radio, TV, and Tower dealmaker.  How does out of home compare to those mediums?

    The business model in TV has completely flipped…It wasn’t that long ago when these networks…used to pay television station owners to carry their content.  Now its completely opposite.  TV owners have to pay the networks for their content and then they go to the cable companies to get compensated…It’s a tough business.

    A lot of the revenue decline in traditional media is coming out of print…There’s still a lot of consolidation in that space.

    Radio has just had the two largest players – Cumulus and iHeart – get out of bankruptcy…It’s not a revenue base that features dynamic growth.  It’s mostly flat to increasing single digits.

    On positive out of home trends

    You look at outdoor financials over time and you see compression in expenses.  For instance lighting, printing, certain areas like that were they’re becoming more efficient…You also see revenue grow.   All of a sudden other income has picked up.  There are companies like Adomni or Blip or any of these other groups that are adding revenue…

    On the out of home M&A market

    It’s been incredibly strong.  Last year was one of our best year’s ever.  We did approximately $250 million in out of home deals.  The thing that was interesting for us is how much went to the big three – less than $1 million…There’s an incredibly healthy independent buyer pool out there.

    Scott Wells at Clear Channel Outdoor said recently that Clear Channel Outdoor may be more open to tuck-in acquisitions.

    I think they will…Now that they’ve got more freedom it wouldn’t surprise me at all if they came out of the gate swinging.

    Lamar does $100-200 million/year in acquisitions.  Do you expect this to continue?

    It depends on the deal flow.  Lamar’s not out there spending money just for the sake of it.  We see them increase their aggression as quality outdoor assets become available.

    What about Outfront Media?

    Outfront has been fairly selective for acquisitions going back ten years.  They’re hyper-focused on New York…I met with several of them at the OAAA conference last week and I’ve never seen so much excitement in their eyes…It wouldn’t surprise me to see those guys pick up several acquisitions.

    The other independents?

    It’s not just independents.  Last year we probably did $50 million in deals where mature businesses in other sectors acquired outdoor assets.  We had buyers coming from the tower space.  We had buyers coming from print.  We did a deal with a radio group…It’s people recognizing the value of out of home and wanting to deploy their capital in a space which is safe and viable going forward.

    What can you say about valuations?

    On that $250 million in deals we did last year most of them fell between 8 and 12 times billboard cashflow.  We did several deals below that and we did a couple deals above that.

    What are you seeing in the out of home debt markets?

    We get calls from banks all the time wanting to lend on outdoor deals and by the way they’ve got to have $10 million in cashflow.  So that’s the major banks out of Manhattan.  When you get down to the independent level most of these buyers are dealing with banks that they’ve had a relationship for 20-30 years.  It’s been difficult for your standard bank to get introduced to outdoor and get comfortable with it in a manner of time that won’t risk an operator losing a deal.


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