Drachman M&A Co. and their CEO, Max Drachman always have a good sense of the deal market for the billboard industry. Insider thought this would be good timing to get his update on the market for the rest of 2025.

Max, any takeaways from the IBO and OAAA conferences?

The deal market has returned. After a sluggish 2024 and a couple of pump fakes early in 2025, deals are rolling on the M&A front again. We had several new investor-type visits at both conferences, with new money coming in from other corners of media and private equity. There are a few larger deals out there that will be announced soon, and once that happens the market will continue to accelerate.

Any new developments in the space you are keeping an eye on?

I’ve been digging deeper on the personal injury attorney category. A few months ago, Jeremy Male mentioned Outfront’s attorney book being twice that of the movie industry for them – and that no analysts ever ask about it. At this year’s OAAA conference and on their Q1 earnings call, Sean Reilly mentioned the legal category being very steady for Lamar.

Legislatively, in most states in the U.S., non-lawyers are barred from owning law firms. This policy was reversed in Arizona in 2020 when the Arizona Supreme Court allowed non-lawyer investment in law firms through Alternative Business Structures. The impact is immediately visible – any stretch of I-10 in Phoenix reveals a dominant presence of attorney advertising on both digital and static displays. Some of them are genuine law offices, and some are lead-aggregators. What I’m focusing on now is the lobbying on the investment side to relax regulations barring non-lawyer ownership in law firms nationwide. This will happen and likely in the near term. When it does, it will open a floodgate of billions of dollars in capital from private equity that will be used to scale these law firms. Scale and growth will be bolstered through advertising.  This category expansion will have a positive tangible impact on rates and occupancy in our channel throughout the country.

Is there any particular corner of the market that is hotter than others?

Market share remains the most important value attribute, followed by market size, and ground portfolio (easements and long-term leases are always desirable). In terms of geography, the three best states for valuation right now are Texas, Arizona, and Florida due to growth and their vibrant economies. Heritage / multi-generational family businesses with strong positions in their market areas are often the highest valued, regardless of region.

Has recent geopolitical upheaval had an impact on valuation?

OOH valuations are some of the most resilient in media. I started in OOH M&A in 2009, so I’ve operated through the great recession, Covid, different political swings, and OOH’s floor is amazingly sticky. Multiples can jump up occasionally during short-term periods (most recently Q4 2021 – Q3 2022), but macro headwinds will have a larger impact on deal flow than valuations. Buyers often pursue opportunities during challenging market conditions, though with limited success. Sellers, on the other hand, tend to wait, anticipating a market rebound. That rebound has arrived, and we can expect a significant increase in deal volume moving forward.

Any other questions that have come up recently?

There have been some questions lately about valuations for management agreements and if 1031 exchanges are possible in OOH. We have closed deals involving portfolios of owned assets that included some managed locations. We have found management agreements are valued similarly to transit/municipal contracts where the multiple paid is roughly half the term remaining. For example, if you have an agreement to manage inventory with eight years remaining, the market would likely be around 4x Billboard Cash Flow. Regarding 1031/like-kind exchanges, roughly 15% of our deals have a 1031 component built into them. We are not tax experts so please consult your tax professional, but depending on the depreciation schedule applied to your assets, you might have opportunities to 1031 into other assets with the same schedule.

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