If there are going to be deals in 2009, they’re going to be cheap and rife with earnouts and back-end options, said M&A execs from media companies NBC Universal, Meredith Corporation and Liberty Media during a panel at yesterday’s Gridley conference.
“In 2009, we’re going to be even more risk-focused and, to the extent that I can, negotiating backend options,” said magazine publisher Meredith Corporation’s John Zieser.
“We’re very interested in looking into creative deals in 2009,” agreed NBC M&A exec Jessica Schell.
The problem is that not everyone is so sure that things will return to “normal” even after this recession over. Liberty’s Michael Zeisser put it most eloquently:
“This is truly the first global recession we’ve had, so for anyone to have a normative view of what will happen when is just pure fantasy. Some people have this view of ‘Oh it’s bad, but it’ll be normal again. My question is: What’s the new normal? As a professional investor its irresponsible to deploy capital until we can answer that question.”
And any deals at all will be made on the very cheap. “We are looking for Benjamin Graham’s margin of safety like never before,” said Liberty’s Michael Zeisser, referring to the the principle that a buyer should acquire assets not for prices reflecting their intrinsic worth, but at prices guaranteeing minimal downside risk.
“Can we make one and one make 3 or 4 or 6? It has to,” said Meredith’s John Zieser.
Otherwise, all the executives agreed, their companies would rather partner than buy in 2009. “2009 will be the year of the alliance, not consolidation.” said John, to nods all around.