Anybody else noticed how quiet the OOH M&A market is? Billboard Insider has noticed a slowdown in new tombstones and purchase announcements. The slowdown has two causes.
High interest rates.
The prime rate has almost tripled since 2020 from 3.25% in March 2020 to 8.5% today. Look what the Prime Rate has done…
Higher interest rates mean that less money can be borrowed to finance a purchase which in turn means that valuations have to fall. When values fall many sellers sit out the market.
Public companies Sitting Out.
Lamar reduced its pace of acquisitions this year in order to use money to pay off a term loan. On last week’s earnings call Lamar CEO Sean Riley said Lamar expects to spend only $40-50 million on acquisitions in 2024. That’s way down from the $480 million Lamar spent in 2022 or the $139 million Lamar spent in 2023. OUTFRONT has been distracted by lagging transit performance and leverage which is above its long term 4.5 times Debt/Cashflow target, although that will change with the sale of the company’s Canadian assets. Clear Channel is over leveraged and has no money to acquire anything. Boston Omaha’s Link Media makes a big acquisition every so often and then spends a couple years digesting what they’ve acquired.
But 2025 Looks Better
The acquisition market has slowed because of high interest rates and a lack of public company activity. Things may be about to change. Moderating inflation is making the Fed think about cutting rates for the first time in years. Lamar’s term loan is paid off and Lamar CEO Sean Reilly is on record saying “we think things are going to pick up in 2025.” OUTFRONT’s Canadian sale fixes leverage issues. And Link Media hasn’t bought anything big since 2022…
What are your thoughts on the current OOH M&A market and the outlook for 2025? Email davewestburg@billboardinsider.com or use our comment box below.
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