Today’s podcast guests are Paul Wright and Carson Frost from SignValue, the out of home appraiser and broker.
Some highlights from the conversation.
Are we seeing 8-14 times cashflow trading multiples in this recession?
Yea. Those multiples have held fairly constant…We’re talking about stabilized cashflows, not current cashflows.
Five Trends to watch in 2021.
- We’ve thought about the adoption of programmatic by the big three and how they could apply that to some of their smaller local advertisers when they’re doing a by for a traditional…vinyl display. We think that the big three especially…should be putting the emphasis on the adoption of programmatic for their vinyl displays…The days of a pdf quote or an excel file quote and then going back and forth and signing a document…that probably ought to be all wrapped together into some kind of supply side programmatic system.
- Funds have been held back on digital deployment. That’s just waiting to burst. We think they’ll likely start to put in orders and start buying next year and make up for lost time.
- We are not as optimistic about the revenue potential for growth…as some of the other experts…We see numbers at 16-22% increases. We just don’t think that’ll take place. If we have a 4-5-6% growth next year we would be thrilled…
- We will see a shift in market share from other media that is market based.
- More out of home in new places…malls, offices, elevators, garages, school campuses, stadiums, convention centers. Digital displays are becoming part of the fabric of the architecture in new developments. We are just inundated with calls from developers who want to incorporate out of home in their designs…
Lamar was very fortunate this year…most of their revenue was coming from traditional roadside signs and so they didn’t suffer as deeply and they won’t suffer as long. They were in perfect position to weather this storm. Lamar’s footprint has positioned them to not be effected as harshly as the other public companies…Lamar’s focus on secondary markets has really helped them…
OUTFRONT was hit pretty hard and that’s mostly because they have…transit assets. They are in subways and major markets and a lot of folks just didn’t want to get down in the subways…we think it will come back, it’s just going to take a little longer and people will have a harder time trusting coming back into those places…Prior to covid you saw a lot of millennials flocking to major cities. And that trend has taken a complete reversal due to covid…I know Florida right now is getting a lot of people that were up in New York…
Clear Channel Outdoor
Clear Channel was obviously struggling financially before the pandemic and so they were probably the least prepared…and it was probably the hardest on them. They have a lot of airport assets and as you know airport travel is way down. They are struggling and will continue to struggle…
Link Media has weathered the storm far better than the big three. That is apparent in their desire to remain very active in the acquisition market.
The independent out of home companies.
Many of our clients have told us that they’ve returned back to normal faster than the big companies have. Some companies have even seen growth this year over their performance in 2019…We continue to see some of these larger and midsized companies remain very active in M&A. We’ve also seen some new entrants into the marketplace. I’ve dealt with a couple of different law firms this year that are out looking for assets to purchase…
What advice do you have for independent out of home companies?
This year is a fantastic time for independent companies to be collecting, cleaning and managing their data…A good location list is critical to being able to analyze a billboard company’s value. I see it a lot where billboard companies will have a location list in excel and it’s not what I like to call clean data…We’re happy to help our clients with that if they want some tricks on how to keep their data clean.
Another recommendation that I’ve got for every independent family owned or smaller sized billboard company is that they should have a clear cut exit strategy and/or an emergency plan in place…so when it’s time to sell your plant you’re ready to do so.
Another thing these companies can do right now is to refinance any outstanding debt…Interest rates are extremely low and it’s a very good time to think about any high debt you have.