Today, we continue with three questions to our All-Star M&A Brokers.  We address what they are seeing in values ranges,  what is up with new buyers coming to the industry and the challenges they see in getting deals to the finish line.

Included in our group:

• Max Drachman – Drachman M&A Co.
• Jim Johnsen – Johnsen, Fretty & Co.
• Lou McDermott – Kalil & Co.
• Marty Williamson – Williamson Associates
• Paul Wright – SignValue

Are we still seeing new buyers entering the Out of Home space?

Lou McDermott – We are not only seeing traditional OOH buyers in the space, but also burgeoning interest from other industries, such as broadcasting, where synergies abound.

Jim Johnsen – Absolutely. Both on the strategic as well as the financial side of the house. Over the span of the past 30 years we have seen new buyers constantly coming into the space…think Scandron, Chancellor, Next Media, Look Media, American Outdoor Ace Outdoor, Capital Advertising, Pacific Outdoor, 24/7, Bressler, Magic Media, Olympus, Titan, Intersection, Orange Barrel, All Over Media, Big Outdoor, Branded Cities, Fairway-Adams, Standard Outdoor, Trailhead…the list goes on and on and on. With that said, I think that recently the new entrant activity has been more pronounced. Whether its low interest rates, increased interest from capital sources, new ways to skin the cat on new locations, new smart young blood or all of the above…it’s hard to say.

Marty Williamson – Yes, we always have new buyers entering the picture but have seen an even more substantial increase in the past 2 years. Not just new companies but also existing ones who have decided to expand for the first time.

Paul Wright – There have been a few new buyers like Verde Outdoor, Trailhead, etc. that are making acquisitions. We have also had a lot of calls from groups that are not big players in the US right now, but want to start putting down some roots.

What is the range of sales prices we are seeing currently in the marketplace, based on billboard cash flow?

Max Drachman – We are seeing values in a range of 10 to 15 times Billboard Cash Flow.

Jim Johnsen – 11-15 times Billboard Cash Flow

Lou McDermott – The range for multiples on Billboard Cash Flow is around 8 – 14x.

Marty Williamson –  From the past range of 8 to 12 times, we are now seeing more transactions at 12x and over. The average is currently around 10-12x but I would say the range is now wider at 8-14x depending on the market, assets, potential upsides, etc.

What are the biggest challenges being faced in getting deals done?

Max Drachman – It is nice to have an Outdoor experienced attorney involved in a deal. They go much smoother than when clients bring in their family’s attorney.

Paul Wright – The sophistication of buyers and their expectations are very high. They demand a lot of information and want a lot of assurances (title insurance, estoppels, memorandums recorded, audited financial statements, rights of first refusal, etc.). Many of these things are out of our seller’s control and can bog down the transaction process and usually don’t lead to much reassurance for the buyer.

Marty Williamson – The biggest challenge is always the same, getting the seller and buyer to the win-win on the price. While multiples are certainly trending up and in some cases substantially… not every seller has assets that will warrant a 12 – 14X multiple, and so we have to help them understand the many dynamics that influence what buyers may be willing to pay. Buyers can pay the higher multiplier if they can see and project a substantial upside from being confident that they can do a better job with rates and occupancy or they will have the ability to add more digital faces to the inventory. All buyers look for an upside…

Lou McDermott – The biggest challenge remains the same: not enough sellers to meet buyer demand for assets.

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