M&As in New Media: Avoiding the Tire-kickers & Romeos

As revealed today in The Wrap's WaxWord column , that media investor Jimmy Finkelstein, who made his fortune in part by founding and selling off the National Law Journal, is playing his court-them-and-dump-them game again. In the past he came close to acquiring New York magazine and Thompson Educational Publishing (in fact news stories in 2004 reported the Thompson acquisition as a done deal) but then backed off. His newest dumpee is the blog iwantmedia.com whose publisher Patrick Phillips revealed Finkelstein spent months and months in 2008 wining him, dining him, discussed a price and signed an NDA, only to bail unexpectedly when The Hollywood Reporter came up for sale.In my experience having both bought and sold media properties, and worked for a company that was a heavy grow-by-acquisition player, in a genuine M&A process the length of courtship is generally decided far more by the seller, than the buyer. When a seller is truly ready to sell, they sell. Sometimes it's prompted by bucketloads of money, but if the seller is also the founder, usually money isn't the main motivator. They're just ready to sell, that's all.  It's like a guy hitting that moment when he's ready to get married, he wasn't before and now, bang he is. Once he is, the wedding happens pretty quickly, even if he hadn't been dating anyone shortly before, or even if the current girl isn't as great as a past one had been.On the media company buyer's side, sincere courtship can take a much longer time. You're schmoozing the properties you want to buy in hopes that someday when they hit that “want to sell NOW” wall, you'll be on the shortlist of people they call first. You may even be able to seal a deal before it hits the open market and the price possibly goes up. I've known media company buyers who spent literally decades making friends with the people whose companies they wanted to buy, keeping in touch every quarter with a call, a note, and perhaps an annual lunch.But the key is the word “sincere”. You don't waste your time schmoozing a property you'd not really interested in. If you're not ready to act, why bloat your calendar with all those lunches and dinners? Unless perhaps you're a professional Romeo and who loves the pursuit but not the marriage.If a buyer is sincere, they'll be ready to act fairly quickly, and sign an initial offer letter within a matter of weeks. The due diligence may take longer, often dictated by what shape your records are in (and for smaller publishers, usually they're in somewhat bad shape.) But even due diligence should not take longer than three-six months max.  If a dealmaker is dragging his or feet longer than that, either their access to cash isn't as easy as they made out, or they're enjoying the courtship far too much. Get out of the relationship.If you're ready to get married, don't waste your time and emotional energy by sticking with a guy who really only wants to date you.

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