According to the firm's Private Equity Barometer, a quarterly survey of more than 100 private equity executives, 15% of private equity firms ranked media and communications among the top three sectors they anticipated being most active in over the next 12 months. In contrast, of the 100 private equity executives surveyed, no respondents had selected the media & communications sector as being one in which they were most active in over the previous 12 months.
The media & communications sector had the third highest average Price Earnings (P/E) ratio (6.75) over the last 12 months trailing Healthcare (7.63), ranked the highest followed by Technology (7.00), according to the survey. Despite an expected decrease in P/E ratios in all sectors next year, media & communications ranked highly (4th place) with a P/E ratio of 6.38. This is behind healthcare (7.33) technology (6.86), and financial services (6.43). Healthcare, with a response rate of 55%, is the most popular sector for expected private equity activity next year and is one which saw the most activity in the previous 12 months (47%).
Mark Henshaw, Head of Media and Entertainment at Grant Thornton says: "As the least popular sector in the survey over the previous 12 months, it is encouraging to see that a growing number of private equity executives are turning to media & communications companies as a viable option for backing. They are also beginning to view the media sector as a feasible choice to support buy and build strategies, despite all the rumblings in the summer about restructurings and re-financing.
"There is a sense of confidence that media and communications businesses are beginning to bounce-back from the market downturn and may therefore increasingly attract the attention of private equity, particularly in the fragmented digital marketing sector. It is also reassuring to see that the sector has one of the highest actual and expected P/E ratios. This can only add to optimistic signs of an upturn in the industry."
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