TechTarget x Informa Deal Creates a Monster Business
Before we jump in, this is the last chance to contribute your thoughts on the state of the ad markets. Please fill out the survey, which should only take you 60 seconds. I will share the findings in an upcoming edition of AMO.
Plus… Don’t miss the inaugural Expert’s Corner lower in the newsletter.
Going into 2024, there are a ton of headwinds for media companies. Traffic sources are losing steam, open marketplace programmatic revenue is going to drop, and AI will disrupt SEO. But how much of this can you actually control?
I’ll tell you what, though… There are two things publishers can control. First, they can focus on creating high-quality content. Second, they can prioritize the capture and activation of 1st-party data.
Omeda has just released a great whitepaper that digs into these various headwinds and offers concrete strategies that publishers can use to turn those into actual tailwinds.
New TechTarget offers immense scale
It’s not everyday that you see a deal that can have a major impact on the b2b markets. But then it’s not everyday that you see the combination of Informa Tech’s digital assets and TechTarget into a new, pure-play digital b2b business. According to the press release announcing the deal:
Informa PLC will contribute its Informa Tech digital businesses and $350 million of cash in exchange for a 57% stake in the combined company. The $350 million of cash, or approximately $11.79 per outstanding TechTarget share, will be paid to existing TechTarget shareholders upon completion of the transaction. Existing TechTarget shareholders will also retain a 43% equity stake in New TechTarget, allowing them to participate in the long-term value creation of the combined company.
In essence, Informa provided a large chunk of cash to pay shareholders of TechTarget plus provided all of its digital businesses, including Industry Dive, which Informa acquired in the second half of 2022, Netline, an intent driven lead generation platform, Omdia, a research business, and various other digital media brands.
In exchange, Informa now becomes the controlling shareholder with 57% of the new company. Stephen A. Carter, Informa’s Group Chief Executive, said on an earnings call:
We deliberately wanted it to be a combination and a partnership. Why 57%? Well, partly the answer is because it is not 100%. We could have a debate about whether it should be slightly more or slightly less. We wanted to be the majority shareholder. We wanted it to be a controlled company in the jargon. But we wanted it to remain listed in the United States of America. We wanted it to be a separate company, to be a pure-play, to be rooted in the American market, where the customers are, where the value is, where the valuation is. But we wanted to be the majority partner, but to have a governance that allowed that company to be the best it could be in its market whilst also being a firm part of the Informa Group.
That pure-play comment, in particular, is worth calling out because it helps to explain the broad rationale for this entire deal. According to Carter:
The most efficient way of driving to scale in b2b digital services is to run it as a pure play so that you have a scale dedicated business doing in digital services what you have in transaction-led live and on demand and content-led live and on demand. All of those businesses will share data; all of those businesses will be enhancing their products and services with digital enablement. But the provision of digital services to the end customer, that’ll be the provision of New Tech Target.
So, let’s break that down for a minute. If this deal is approved by regulators—expected in August or September—there will be two major businesses.
Informa, still very much the larger of the two, will be made up of four divisions, if you will.
- Informa Markets, which is its transaction-led live & on-demand b2b events business. There are over 300 brands across 20 markets and this generated $2.2 billion in revenue last year. This had over 6.2m attendees last year.
- Informa Connect, which is its content-led live & on-demand b2b events business. There are over 400 brands across 6 growth markets and this generated $1.1 billion in revenue last year. This had over 670k attendees last year.
- Academic Markets, aka Taylor & Francis, which has a number of journalists, publishing imprints, etc. and generated $750 million in revenue last year.
- Portfolio Growth Investments, which are various assets that Informa has stakes in, that as a group generated $4.5 billion (Informa would get a pro-rata of that).
And TechTarget will now become a rather large pure-play digital b2b business, with an estimated 2024 revenue of $500 million if the businesses were already combined. But what this deal unlocks is quite a bit of potential upside. Informa & TechTarget estimate that five years after this deal closes, the business will be generating $1 billion+ in revenue with stronger EBITDA margins and much faster YoY revenue growth. And there are a number of reasons for this.
First, this produces an unbelievably strong full-funnel b2b marketing operation. It’ll now have an unbelievable amount of content to move users from unknown to known with both contact-level and behavioral first-party data. From there, it’ll be able to use that data to create both insights (trends, for example) as well as prove intent (how likely someone is to make a purchase). And then the right performance products can be used for the right audience. In total, you’re looking at scale of 50 million known, 1st-party data-empowered users across the two companies.
Second, this deal expands what industries TechTarget can operate in quite considerably. According to Informa’s Carter, TechTarget serves two b2b verticals, whereas Informa serves 20. And so, the combined entity will have a lot more surface area to work from. Additionally, TechTarget had 3,400 customers last year while Informa had 5,700. And finally, TechTarget created 84,000 pieces of content last year whereas Informa created well over 100,000. In other words, combined, this unlocks the ability to do so much more for so many more customers.
And that’s TechTarget’s plan. According to an investor presentation, TechTarget said that its projected total addressable market will climb from 18,000 now to over 200,000 post-deal. New industries, more audience data, robust tech-enabled activations (something I’ll come back to in Friday’s AMO Pro piece) and you’ve got a recipe for a very strong business.
One of my initial questions when I saw this deal was whether or not this was Informa recognizing it may have overpaid for Industry Dive. The total enterprise value for the initial deal was $525 million, which was a nearly 16x EBITDA multiple (assuming earn outs and equity roll overs). Deals are very complex, but if we look at this in the most basic of terms, Informa is buying $570 million worth of TechTarget (total market cap of ~$1 billion) for $350 million in cash + various assets, including Industry Dive. And so, it is possible that, at the time, Informa overpaid.
On the other hand, Informa was certainly not a forced buyer/seller in this situation. And so, it might recognize that it also has an opportunity with this combination to generate a significantly stronger return on investment. I certainly agree with that statement. Industry Dive’s assets are strong and by merging them with TechTarget, you have the makings of a very powerful business.
I’ll close with this… At the AMO Summit, Neil Vogel told me why scale was so important for Dotdash Meredith’s business (after telling me I was an idiot for saying we’re in a post-scale era). And he said:
…everybody [marketers] at this point don’t want to talk to you if you can’t take a big chunk of their money. They want to spend a lot of money and they wanna know it works.
And this is likely true for TechTarget. If you’re a b2b marketer, TechTarget has to be one of the companies you talk to now. It has the scale to take large chunks of b2b marketers’ spend and deploy it across various tactics up and down the funnel. Partners want it easy and they want it to work.
What would you do with BuzzFeed?
A couple of weeks ago, I wrote that BuzzFeed had less than a year to figure things out. Its debt was going to come due and if it couldn’t pay, things would get dire. But it’s one thing to write about how bad things could be and something entirely different to theorize how to fix things. And so, I thought long and hard about what I’d do if I was in charge of BuzzFeed.
But then I had a better idea. The AMO community is comprised of unbelievably smart and talented media operators. And so, I thought it would be so much more interesting to ask you what you would do. And so, introducing the first of its kind, Expert’s Corner, where each month, I will ask the AMO Pro members a question. I will then publish those answers and we will all get smarter. Want to be included in the future? Become an AMO Pro member.
The prompt I gave to the group this month was very straightforward: if you were put in charge of BuzzFeed, what would you do to turn the business around?
Six operators stepped up to offer their thoughts: Sean Griffey, co-founder and CEO of Industry Dive; Scott Jamieson, President/COO of Annex Business Media; Matt Reustle, CEO of Colossus; Scott Brodbeck, Founder and CEO of Local News Now; Adam Ryan, co-founder & CEO of Workweek; and Justin DeMaris, CEO of Organic.
Thanks so much for reading today’s piece. If you have thoughts, hit reply or become an AMO Pro member to join the exclusive Slack. You’ll also start receiving the Friday newsletters, where I dig deeper into tactical and strategic topics important to media operators. Have a great week!