December 13, 2023 • 50 mins
This podcast, hosted by Heather Holst-Knudsen, gathered leaders in the B2B media, events, and information industry to discuss the critical role of data in enhancing business value and navigating mergers and acquisitions. The conversation explored how the importance and use of data have evolved in recent years, particularly in the context of company valuations and M&A activities.
Participants included Kerry Gumas, CEO @ Metacomet Advisors, Reed Phillips, CEO @ Oaklins DaSilva+Phillips, Mark Zadell, Strategic Finance Executive, Thomas Pecht, Principal @ PMS Inc., and Tom Kemp, Chairman & CEO @ Northstar Travel Group.
Key points from the discussion:
• Data valuation has become a crucial pillar in M&A due diligence, with buyers now expecting more sophisticated data analytics and metrics.
• There's a shift towards evaluating leading indicators like Customer Acquisition Cost, Net Revenue Retention, and Lifetime Value, beyond traditional lagging metrics.
• The quality and organization of a company's data can significantly impact its attractiveness to buyers and overall valuation.
• Native digital media businesses tend to be more attractive than those with a high percentage of legacy print revenue.
• Performance marketing and first-party data are becoming increasingly valuable, especially with the phasing out of third-party cookies.
• Diversification beyond traditional advertising models is advisable, with a focus on recurring revenue streams.
• The M&A market is expected to improve in 2024, with more willingness from both buyers and sellers to close deals.
• The quality of the asset, including its data infrastructure and management team, remains paramount in determining valuation.
As the industry continues to evolve, businesses that effectively leverage their data, both for internal improvements and external monetization, are likely to see higher valuations and more successful M&A outcomes. The discussion emphasized that while market conditions play a role, the fundamental quality of a company's data infrastructure, revenue models, and management team remains crucial in determining its value and attractiveness to potential buyers or investors.
Are you interested in joining Revenue Room™ Connect, the first C-Suite network for CEOs and their revenue-critical C-Suite teams in media, events, data/information, and marketplace sectors? We focus on turbo-charging enterprise value using data, digital, and AI.
About Heather Holst-Knudsen
Heather Holst-Knudsen is the founder and CEO of H2K Labs and Revenue Room™ Connect. She is a seasoned executive with extensive experience in digital transformation, data, and revenue growth. She is a recognized leader and operator in media, marketplaces, events, and adjacent technologies. Heather has a proven track record of leading organizations to achieve customer-centric innovation, revenue growth, and enterprise value creation. As a thought leader, Heather shares her insights on multisided business models under The Revenue Room™. Connect with Heather on LinkedIn.
ABOUT H2K LABS
H2K Labs is a tech-enabled value creation specialist that helps media, data/information, event, and marketplace businesses accelerate revenue, drive profitability, and fuel enterprise value using data, digital, and AI. We host The Revenue Room™ Podcast, curate Revenue Room™ Connect, a professional network for CEO and their revenue-critical C-Suite teams, and produce events including RevvedUP 2025. For more information, please visit https://www.h2klabs.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to the Revenue Room,presented by H2K Labs.
(00:05):
Here's your host, HeatherHolst-Knudsen.
I'll just start off by welcomingeverybody to our fireside chat
Heather Bolts Knudson, and theCEO and founder of H2K labs.
I have a very deep background inB2B media and events and digital
(00:25):
information.
And my company right now isfocused on helping what I call
business informationorganizations improve the way
that they do business usingdata.
And part of that is improvingvaluation.
And if they're in the market toeither acquire or be acquired or
gain investors, how data canplay a very significant role.
(00:47):
The purpose of the fireside chatis to be highly interactive.
So when you are available andable to please put yourself on
video.
And either raise your hand orcomment in the chat, but it's a
small group, so we should, nothave any issues in terms of
either having people participateor ask questions.
And I have 2 very illustriousguests as my core panelists.
(01:10):
I have Carrie Gumas, who is theCEO of Metacomet Ventures.
Many of you actually alreadyknow Carrie.
But he was the co founder andCEO of Questex, which he sold to
Mid Ocean Partners in 2018.
And we have Mark Zadel, who is astrategic finance executive and
the former CFO of EndeavorBusiness Media actually as of
(01:33):
quite recently.
Kerry, you want to do a littlebrief background?
Sure.
I guess first of all, it's apleasure to see everyone.
Thanks to Heather.
For organizing this session.
Most I think I know most of you.
But, my background is 40 plusyears business media events,
information in a wide range ofcompanies from startups to the
(01:55):
large read, read global players.
And obviously, with the foundingof quest X.
Middle market, private equityowned media business.
When on this particular topic Ican say I've had a lot of
experience, some of that good,some of that definitely in the
bucket of lessons learned andhopefully can help others
benefit from some of thatexperience.
(02:17):
Terrific, Mark.
Yeah, good morning all.
So as Heather said, I wasrecently the CFO of Endeavor
Business Media, which when Ijoined nearly 2 years ago, I had
come from a background where inthe investment business, I
followed companies like Disney,Time Warner, Viacom, Comcast,
and thought I knew media reallywell.
(02:39):
Which I guess I knew one type ofmedia, but B to B taught me it's
a completely different animaland I think has different data
needs and just different ways tolook at the business versus some
of those other traditional formsof media.
And so I think in one of thoseis from a data perspective, I
think you have to look at ituniquely.
And so having had experiencedmyself in different finance
(03:03):
roles and insurance and softwareand distribution allows me to
some degree to take some ofthose paradigms and apply them
in a different environment.
And ultimately use the data.
To come up with actionable stepsand then push that culturally
throughout the organization sothat the company can function on
(03:23):
its own.
I enjoy doing that.
I've done that with pretty muchevery company.
I've been at including endeavor.
And so it's fun to be here withyou all to talk about it and to
some degree evangelize it.
Perfect.
Yeah, This is supposed to, as Imentioned, be very interactive.
So I thought Reed, do you wantto do a quick intro in case
there are people on here thatdon't know you, which I find
(03:45):
highly unbelievable, but itwould be great to do a quick
intro.
Yeah, sure.
Yeah.
Thank you, Heather.
I'm Reed Phillips.
I'm the co founder of Oakland'sto Sylvan Phillips.
So we're an investment bankbased in New York that focuses
on media marketing informationand more and more software.
We have about 25 full timepeople, and we also have a
(04:08):
number of senior advisors, andwe're part of a global group
called Oakland.
So we have access to, Otherinvestment bankers and 45
countries and collaborate a lotnow on international deals.
Excellent.
Excellent.
Thank you Scott, you're fromCanada.
I believe you want to do a quickintro.
(04:30):
Or Heather.
Yes, I'm Scott Jameson withAnnex Business Media.
We are a B2B media company outof Toronto and the rest of
southern Ontario.
We have 60 B2B media brands anddo about 75 live events a year.
We still print our ownmagazines.
I know that's a bit of athrowback.
We have our own printing press,print our own magazines take it
right to the root.
(04:51):
And thanks Heather for theinvitation.
Terrific.
Terrific.
And Tom Pecht, you're you areone of Mark's guests.
Thanks everybody.
I know a number of people here.
Tom, how are you doing?
It's been a while.
Great.
Great.
Good to see you.
Great.
You too, Tom.
So it's all good.
So I'm, so about 3 years ago, Iformed a new company called TI
(05:15):
Partners out of Atlanta.
Along with Derek Shawty's formerMorgan Lewis.
We figured out finally that thebest way to get out on the
highway is to hire a bunch ofsmart MBAs from Emory.
We've been off and running.
We actually do a lot moresoftware technology enabled
services.
We're in the market right now,for example, with a a company
that's in multilingual chatusing AI or call centers.
(05:37):
So we actually have segued alittle bit away from media.
Having said that, Earlier thisyear, we did a deal with Wolters
Kluwer and and also sold a anonline software community as
well to I think it was techadvice up in Nashville.
So still in media, not as muchmore software, but there you go.
(05:58):
We love the business and lovemedia.
And it's great seeing you guys.
I think we're the last manstanding here in this field.
All of us.
Thank you.
And Ryan Delahunty.
I don't know if you've got hereyour video on, but I believe
you're here.
I'm here.
Quick intro meeting hopping.
Can you hear me?
Okay.
(06:19):
Good.
Good.
Ryan Delahunty work with Gardnerbusiness media.
We're a family owned andoperated Discrete part
manufacturing media companybased in Cincinnati, Ohio.
We've got brands all over NorthAmerica as well as three brands
in Mexico.
We're in the event business, thedigital space, as well as the
print media business.
So thanks for the invitation.
Terrific.
Terrific.
And then Steven Acunto, I'mgonna pop over to you.
(06:42):
Yeah.
Good afternoon.
Thank you for organizing thegroup.
You always put together a goodgroup.
I'm sorry.
I was a few minutes behind.
Junior.
We my father and I put togethera holding company four years ago
to go out and acquire one of theleading titles in the risk and
risk management and risk andinsurance space in the U.
S.
And then we went out and boughtfive, four more businesses three
(07:03):
of them over zoom in 2020 and2021.
So we've rolled up a bunch ofbusinesses in that space across
a numeric geography, NorthAmerica, EMEA, and South China,
Asia.
So I oversee operations anddevelopment for the group.
(07:23):
Terrific.
Thank you.
Tom, welcome.
Nice to see you.
Hi, Heather.
Thanks for inviting me.
And as soon as I saw my goodfriend, a guy who I have huge
respect for, Kerry Gomez, on theprogram, I had to sign up for
this.
And so Here carries words ofwisdom about data driving value
and read it's great to see youTom.
(07:45):
It's great to see you too.
Yeah.
So I'm Tom Kemp.
I'm chairman of North StarTravel Group.
I was for 14 years chairman CEOof North Star Travel Group.
It's a leading B2B informationand events company and serving
the global travel industry,which is a great industry to be
in.
It is a great industry now, butduring COVID was hit pretty
hard.
(08:05):
We're looking at our potentialexit relatively.
Near term and data and drivingdata and intent data and all
that is a hugely important partof our strategic plan.
So thanks.
Absolutely.
Paul say no more.
I'm glad to see you back on.
Yeah, took me a minute.
But here I am.
(08:25):
Hello, everyone.
I know, certainly some of youhey, Carrie I have been working
at the B2B events business herein Mexico for.
32 years and our company Tarsus,as you see, the logo was just
recently acquired by Informa andI will be leaving the company at
the end of this year.
(08:46):
And and so I'm interested injust talking to you guys and
listening to what you have tosay.
And yeah.
Terrific.
Terrific.
And just my team is on here.
Scott Evans is a partner ofours.
So Scott, I know, some of thesepeople quick intro and then I'll
introduce my team and then we'llkick off.
You're on mute.
(09:07):
I do know a few of the faceshere.
It's great to see some guyscarry.
It's it's a pleasure to be backon with with such an an
experienced group of people.
The last man standing statusalso gives you a lot of
interesting insights that I'mhoping to benefit from.
I started my career in theagency business.
I was with Gray Advertising andMadison Avenue for 11 years, and
(09:29):
then moved on to a littlespinoff called Razorfish, which
was the first digital agency.
In in the world, believe it ornot.
And from there I started doingdigital innovation work at
Razorfish for a bunch of CPGcompanies, and then made my
break into the event space whereI I took a job as innovation
director for read exhibitions inNorwalk, Connecticut.
(09:51):
I worked for Chet Bruchette, ifanyone knows that name.
And that was an interestingexperience.
I really.
Did not know much about theevent space.
But that program was a wonderfulimmersion into the global events
business.
Did a lot of a lot of work withcustomers, looking for those
hidden sort of insights thatcould lead to revenue and growth
(10:12):
and data.
Was a big part of that story.
After I left read I joined acompany called balloon, which
some of you may be familiarwith, we're a two sided
marketplace where we enhancephysical trade shows with a with
a product discovery, servicediscovery marketplace, and
recently partnered with Heatherand H2K to dive deeper into what
I think is one of the biggestchallenges facing the event and
(10:35):
media business, which is.
Which is the data side of thingsand and bringing an industry
that may be lagging a bit inthat area up to up to speed.
Pleasure to join you guys andI'm looking forward to the
conversation.
Great.
That actually is a great way tokick off the conversation and to
put some context around data.
What do we mean by data?
(10:55):
Many companies call themselvesdata driven.
I recently spoke about this andI think they're data aware
versus being data driven.
And I also think there's a lotof confusion about, what does
that mean?
I recently participate.
Took a course MIT offers on datamonetization and they have a
very good framework called IWS.
The I stands for improve.
(11:16):
It's how you're using data toimprove what you're doing
internally.
From reporting or predictiveanalytics or gaining deeper
customer understanding.
All of those things add cash tothe bottom line, or are supposed
to.
The second part of thatframework is the W, and that is
actually how you are starting tocommercialize data.
(11:36):
And that is wrapping yourexisting product set with
enhanced data analytics toeither improve your customer
retention Increase wallet sharecreate an upsell opportunity,
but it's based around whatyou're currently selling.
And it's the next step becauseyou don't have to do any sort of
(11:57):
you don't have to do much interms of organizational change
to actually activate that.
And the third part is sell.
And that is the taking your dataand creating a brand new
monetizable product that you aregoing out and selling as a
subscription that actually doesrequire huge amounts of change.
In the business which is whyit's last and really that
(12:18):
framework, they're allintertwined.
You cannot do w without the I ws.
And all of that leads to how yougo to market as a business.
Whether you're, you're acquiringcompanies or you would like to
be acquired or you're seekinginvestment.
So that is how we will beapproaching data within the
(12:39):
context of this discussion.
I'm going to kick off with our1st question.
And I'm going to throw this outto carry 1st, which is how to
integrate data valuation intoyour overall strategy when
assisting or engaging in amerger and acquisition.
Activity and have metricschanged, from when you sold
(13:00):
quest X in 2018.
And what you're seeing now areinvestors.
Also expecting and asking fordifferent types of metrics than
they were before.
Yeah, thanks, Heather.
That's that's a great way tostart the conversation off and I
think.
Everybody that's probably onthis zoom can relate either as a
(13:21):
buyer or a seller, anintermediary.
Thanks that, the process ofvaluing and either buying or
selling a business is extremelydata intensive, in and of
itself.
The process, is data intensive.
And I think over time,certainly, 1 of the things that
you see is that I W.
S.
Model that you reference.
I tend to think about it is.
(13:43):
Performance related data on theone hand, and product or
productize, data on the other.
That's either being used for UXto improve customer experience
or strictly, to monetize andcommercialize as you go through
and you evaluate businesses.
One of your first impressionsthat's generated in the context
(14:04):
of an M and a transaction, isthe performance related data,
right?
It's the accounting.
It's the business metrics aroundthat.
And, certainly I can think ofmany different situations where,
you know, that first impressioneither attracted you even more
or attracted you less.
Because of the quality of thedata and the information, right?
(14:25):
When you ultimately get to, theproductized, data definitely
there's been a change, and a lotof that obviously has to do with
the business model, right?
The underlying business modelsmoving from, analog to The
digital business modelscertainly pushes you to evaluate
and look at the data a littlebit more carefully.
You know what I would say, andmaybe I wouldn't put this in a 5
(14:46):
year time frame, but let's say10.
Is that if you're if you wereeither preparing a company, for
sale and preparing it, preparingits data room and preparing it
for due diligence and managerpresentations, what have you.
Or on the other side on the buyside, if you were getting ready
to conduct an evaluation.
10, 10 years ago, you might havestopped your data assessment, at
(15:10):
a numbers oriented evaluation,right?
Nu numbers of attendees, numbersof subscribers, various, metrics
around that.
The validity of, the company'srepresentation of what was
actually in the database, right?
And maybe you had a a furthertechnology assessment that leans
(15:30):
more towards the the technologyplatforms, that the company was
using.
But I think that flash forwardto where we are today.
And I think this is an entirepillar of whether it's due
diligence that's being conductedon the buyer side or,
preparation, by companies thatare that are operating their
(15:51):
businesses and considering anexit.
There's an entire pillar of datavaluation and the process and
around that, that increasinglyis a critical driver, of the
attractiveness, of theparticular asset and ultimately,
the valuation.
And there are they, There aresome very specific methodologies
(16:12):
that are brought to thatprocess.
And I think I'd defer here to,maybe, read and Tom it is guys
that are helping companies onboth sides of the buyer, seller
line, but that data valuation isreally a really critical part of
it.
The due diligence, theevaluation process, and the last
thing I'll say there is thatthat you have to remember as a
(16:35):
seller, you're running abusiness, right?
You're, you built it, you'rerunning it you're doing all the
things that you need to do to besuccessful, you're monetizing,
or in some cases, not monetizingbut each buyer that's out there,
has their own perception of whatis valuable in your business,
And they also have their ownbusiness model, their own
(16:56):
methodology, for how they goabout conducting business and
with regard to data, monetizingthat, right?
So part of the art of, gettingthe company, positioned and
driving, the greatest value forit, I think, in the M& A
transaction.
Is really understanding andbeing able to communicate to
those very different, buyerperspectives, given different
(17:18):
businesses are looking for, fordifferent things to be added
into their business and they mayvalue it a little bit
differently.
And it's why I place a prettyheavy emphasis on a really
thorough data data valuation legbasically of the the the process
for, preparing a business, forexit.
(17:39):
That's really interesting.
The things, the data points youwere talking about earlier, like
attendees and subscriber, all ofthose are what I call today and
yesterday numbers, so laggingtheaters what I've been hearing
and actually Tom and read.
I actually, I'm going to call onyou and Mark on this 1 is.
Cost of CAC, right?
Customer Acquisition Costs NetRevenue Retention Lifetime
(18:04):
Value, and not just on, theadvertiser or sponsor or
exhibitor side, but on theaudience side.
And Expansion.
These are what I call health.
Indicators, and it's a hugestruggle.
And Mark, I'll call on youfirst, just because I know you
and I've been talking about thisfor a while, but, what's your
experience with this?
(18:24):
Yeah.
So some of the uniqueness aroundB2B is a few things.
One is you have two customers,right?
You have advertisers and youhave audience and you have to
keep them in sync through B2B.
The glue of that, which is thecontent and so while content is
not easy to measure it issomewhat measurable in terms of
what you're putting out there.
(18:45):
And I think being able to atleast track or understand, is it
short form long form.
Evergreen, is it strategicsomehow bucket ties it in a way
that you understand how you'reapproaching the market and know
what's holding togetheressentially your revenues in
line with your audience theother as you address the whole
(19:05):
lifetime value.
Concern with audience, it's it'san exhaustible asset, right?
Every audience member is thevalues going to erode over time
as you continue to use them.
And I don't mean that in apejorative way, because it could
be helpful to them too, but overtime, there's a sort of a
(19:25):
depreciable element to that.
And Tom, you're preparing for anevent with Northstar in, and
you've been through this rodeomany times.
Is it different now?
And are you being asked to puttogether data that I, that we
just described in terms ofthese, the leading indicators,
(19:46):
the health of the businessversus the normal stuff?
Yeah, I think it's changeddramatically over the last few
years.
And I think the accelerationthrough COVID, particularly its
impact on what had beenparticularly event driven
companies carry with all of hisexperience.
Noses is it's changeddramatically in that.
(20:07):
And North Star has always been aomni channel company, marketing
company that connects buyers andsellers through all different
channels, through content,through software, through
through our face to face eventsour digital media products.
But more and more importantly,as we go forward is first party
data.
You have your top of the funnel.
You bring in bring in your usersand audience through the top of
(20:30):
the funnel and bring'em throughthe bottom of the funnel and
converting them to to knownusers and then to behavioral
data and then intent data.
And I think the a big trend andthe more we can.
Focus on performance marketinglower in the funnel.
So you can draw the parallelsbetween spending money on
(20:50):
promotion and advertising andsponsorship and connecting that
with a sale and performance.
And so a lot of what we're doingnow is focused on building that
first party data building.
understanding behaviors of thatfirst party and then intent data
and connecting that to atransaction.
(21:12):
And so it's become much moreimportant.
I think as we go forward for aperiod of time, as Kerry Weld
knows, a lot of buyers andinvestors were looking at, in
some cases in B2B, primarilyevent driven companies.
And now they're looking foromnichannel companies that can
monetize their audiences in therelationship with sponsors and
(21:33):
advertisers in a much more fullway.
And I think it has changeddramatically but particularly
with cookies going away thatfirst party data, as well as the
context.
Of the content that you have andthe closer alignment you have
between your your content andthe environment in which people
are promoting their products andthe context and the content of
(21:55):
that is much more important.
Thank you.
No, absolutely.
And read, you're heavilyinvolved, obviously in, in
putting together buyers of withacquirers.
And this must be something onboth sides of either doing it
really well and they get it ornot.
What's your perspective?
Yeah, as everyone else has said,and I agree completely.
(22:17):
The process of, buying andselling companies is much more
rigorous when it comes to duediligence.
For example, one of the bigchanges.
Is that almost every buyer thatwe're encountering requires a
quality of earnings beforethey'll close on the
transaction.
A lot of times the sellers willtry to preempt that and do their
own quality of earnings.
(22:38):
But that's an example of just.
A lot more data, a lot more,rigorous examination of each
business before they'reacquired.
And then when we're involved insoftware companies, there are
just a lot of statistics andthings that buyers are going to
expect and that's starting to.
flow into B2B deals as B2B mediacompanies get more complex and,
(23:03):
as they're doing more with data.
I put the hierarchy in terms ofvalue at data and information is
the highest value that you canwhen you're attributing value to
a B to B media company, eventsand subscriptions come next.
Not all B to B companies havesubscriptions.
And then after that, it'sadvertising driven businesses.
(23:26):
We found really I would say,since since Covid, we found,
Less and less interest inadvertising driven businesses
become a more of a struggle tomove those companies.
So if you have an advertisingdriven business, I would
strongly recommend that you addon, as Tom was saying, events
and data and just be a multichannel business that's going to
(23:52):
be of much greater interest toacquirers.
And and there are just somereally impressive examples now
of B to B media companies thatare using data in really
interesting ways and monetizingit.
And creating a lot of value fortheir companies.
Randall Riley's a very goodexample of that.
(24:13):
Oh, yeah.
They've been doing great.
By the way.
Congratulations.
The Taunton Press and ActiveInterest Media team.
That was big.
Thank you.
Thanks, Tom.
Thanks very much.
So any questions on this topicbefore I go to the next
question?
All right.
Actually, I was going to asksomething about due diligence,
(24:35):
but I think I want to go to Onethat I'm going to go to the
value real, the valuerealization question because
I've actually heard this issuetoo.
And that is one of the biggestinvestment thesis is when you,
when I, when a media company oran event company is buying
another one or private equitybusiness is going out and
saying, I want to add to myportfolio is that you plus two
(24:58):
equals 10.
That there is a convergencegoing that's going to happen on
audience on advertisers andsellers and data and then the
acquisition takes place and thenyou have this.
Oh, wow that's not happening theway we wanted to the data's in
the way and, there's a lot ofeither delay or.
(25:19):
Sometimes failed acquisitions.
Carrie, you were recently talkabout without naming names your
experience with this.
Yeah that's that's a good one.
I can probably give, that sortof a half dozen, examples of of
the great, the great stories.
I want to think of somethingthat's a little bit more, more,
(25:40):
more recent, right?
And I've got to be careful aboutnaming names, but let's say that
you've got a business that'sprofiled that's financially, got
very attractive characteristics,right?
It's somewhere, for as an add onbusiness in particular to put it
in those terms, right?
Growing at double digit, rateswith, 30%, EBITDA margin, right?
(26:00):
On a relatively large, 10 15million revenue base, right?
So just from the from that,profile alone, you know that
you're going to get, a certainlevel of interest, right?
Because it's got, some financialcharacteristics that are going
to be attractive.
And, if it's in the rightvertical that that a buyer has
prioritized, you're going toget, very strong interest.
(26:23):
The difference between, acompany that it has really
thought about, data as astrategic asset and a driver, of
enterprise value.
And has made the investment, inin its data in its capabilities
and its platform.
Let's say the differencebetween, having done that and
(26:46):
let's say a company that'staking a more legacy organic
approach.
The difference there is reallystarts with a very binary
decision, right?
Buyers and I've experienced thispersonally, right?
Where company a that Idescribed, attracts A lot of
buyers, a lot of buyer interest,particularly in the 1st round
(27:08):
company B gets that initialinterest, but very quickly there
is a fall off because it justdoesn't show.
Because the right the datahouse.
Is not in good order.
Taking it another step further.
And really driving a premium,valuation of premium above
average, premium multiple,right?
(27:30):
Part of that is We I think weall know, like part of this
timing related, right?
We're hitting the market at theright time, with the right
asset.
And you've got, enough enoughbuyer activity, but.
On that initial impression,right?
There is the next, level of canthat company, stand the test, of
due diligence on a very rigorousdue diligence process.
(27:51):
And the thing that I thoughtthat was interesting about the
comments that Mark made Mark,Tom and read is that we're
seeing a lot of software,evaluation methods.
And metrics.
Coming into the evaluationprocess, you know of b2b, right
(28:13):
the more digital our businessesare The more digital platforms
are fundamentally about businessyou know the more we're hearing,
mrr ar clv cla I could go onwith the alphabet soup right of
metrics and analytical toolsthat are being applied right?
But these are in many ways likethey're coming from analytical
(28:35):
processes that have been used toevaluate data and information
and software businesses, for areally long time now.
We're, we're seeing them in B toB.
So if you don't reallyunderstand what those analytics
are, what they're all about andthe business isn't really there
for, ready to come under thattype of evaluation, that type of
(28:55):
scrutiny.
Let alone whether it'sperforming right at a right
level.
But, if you're not ready forthat type of analysis.
You're going to diminish thevalue ultimately, the return to
the shareholders because thebusiness may simply, get a turn
of a, complete, full multiple ormaybe even to less value, versus
(29:17):
the company that is preparedthat does have the data that can
show it.
They can demonstrate it overtime.
It can stand up to the bevy of,accountants and technical
advisors and what have you, thatare going to be in under the
hood, right?
So I think that's the way that Iwould, frame it.
Yeah, I actually, this is thereally tragic part about it.
(29:38):
It's always frustrated me withmedia and events companies is
that the data is there.
It is absolutely there.
And actually, it is plentifuland very rich.
But because of lockages in termsof getting that view and, it is
(30:00):
prevent you could be losingvalue simply because you don't
have the right data stack inplace.
And Mark, I'm going to throwthis over to you.
And you're not just a CFO, youare a value creator.
And what's your advice?
Yeah, so there's a foundationalpiece to this, which you were
alluding to.
If you have the data, you shouldbe leveraging it.
(30:21):
And it should when you provideit through the data room, it has
to tie in with whatever storyyou're telling.
And you have to know that beforeyou present it to a potential
buyer if you're on the sellside.
But I think there's, I thinkthere's a couple other pieces
which could have a very heavyinfluence on value that are
(30:42):
aren't often used, especially atthe smaller end of transactions.
But as you start to get into the50, 100, 200 million range
really should be table stakes.
And one of those is good CRMdata.
And that CRM data needs to tellyou what are the activities of
the Salesforce, by person, whatkind of disposal rates do they
(31:04):
have?
What kind of win loss rates dothey have?
What's the underlying activitydriving the sales?
And one of my favorites isalways have it is to make sure
you have a paradigm orunderstanding around.
Where are you actively sellingversus where is someone taking
orders and to at least know howto manage match that value prop
(31:27):
with a cost so that youunderstand if it's order taking
that's at a minimal cost if it'screating value through an active
sales process, there can be aheavier investment on that and
customer acquisition costs couldbe higher because you'd expect a
bigger benefit.
And then the other area, which.
Okay.
I think is probably not tablestakes now, but is becoming so
(31:49):
is just buyer intent and havinga just a deep understanding of
what's happening to youraudience and their journey and
being able to use that toleverage a discussion with
customers around R.
O.
I.
So that the company ismaximizing its revenue and
pricing.
Right and Tom, I don't know ifyou want to weigh in on this.
(32:10):
I think it's pretty interestingthat you used to, or you still
have engaged, but you're, youwere very focused on media.
And now you've moved into moreof the technology and
information type businesses.
Is that correct?
(32:32):
And with that, if, a mediabusiness were to come to you
today and say, Hey, Tom, help usout.
No, like seeing the differencebetween the two sides what
advice would you give?
My first advice would be if Iknew the potential client, I
said we should have went tomarket 10 years ago.
Because what you think you havenow is not worth the price of
the Queen Mary.
That's just being brutally, ifthey're an advertising driven
(32:54):
firm.
I hate to be brutally honestabout it, but that's an ongoing
issue that that we'll have.
If you haven't made the, I callit the leap across the digital
divide, you're going to not getthe outcome you expect.
And we've seen that time andtime again.
Everybody in this in thisconference call.
I've seen that and it's nosurprise where I were.
(33:15):
Interestingly enough here.
We've been talking aboutquantitative data recently.
I've seen on the radar screen.
Now, in terms is qualitativedata.
And measuring that it can bemeasured.
And, what really, my qualitativedata is observational data, are
we conducting is a way tocapture through interviews or
(33:36):
focus groups or evenquestionnaires buyer intent.
So there's obviously there's.
Quantitative data, but it's aqualitative data has now learned
to mix and strange andinteresting enough.
We're seeing that even insoftware companies that we're
selling is that how are youmeasuring to Mark's just recent
(33:56):
point about that CRM data?
There's more to it than justwhat's driving sales, and that
actually qualitative data.
That's what we that's gives thehaving that gives an extra to
lift another turn, so to speak,on that multiple at the end of
the day.
But to go back to the originalquestion, if someone comes to me
today, the first area I'm goingto go to is everybody else is
(34:20):
which, show me your series fromyour sales pipeline.
Show me wins and losses.
I want to really get this intothe bowels of the business and
see how it's operating.
And I also want to understandabout the content you're
producing.
Content still drives intent, sowe can't miss that.
And is that your content?
Do you form that out to people?
Show me that, and then I cancraft the story.
(34:40):
And it's all about thestorytelling.
We, together here, everybody inthis, on this call, are great
storytellers, or else wewouldn't be in media.
So to the extent that we cantell the story, the more, the
more interested buyers we'regoing to have.
That's really interesting and Ijust drew this or this 4 big
points that I think have beenmade during this call is.
(35:01):
1 is having your data story andhouse in order and make sure
you're telling the right storyahead of time.
The 2nd is you need to have theright qualitative data.
Those leading or revenue healthindicators.
And you're adding in thequalitative data, which is my
data.
So good, whether it's my contentor my CRM that I actually can
(35:21):
see and identify.
Trends that are happening or,opportunities.
And it's not just close one orclose loss rates.
It's, maybe customer segmentgrowth that, in areas we didn't
anticipate.
And then the last one really isis data products.
The real true data monetizationthat you are.
You're taking this incredibleasset that you have, and you are
(35:43):
creating a product that can be,moved into a, a repetitive
revenue stream, but it's helpingyou diversify away from
advertising.
Those are the four points I'vetaken away so far.
And I actually thought your lastpoint that you said CRM and
content, you'd actually didn'tbring up audience.
Yeah, actually, I just want topush a little bit on that point,
(36:05):
though, right?
About advertising businesses,because not all advertising
businesses are the same, right?
So and in B to B media, right?
We let's we can look at a fewreference transactions.
So I probably can't talk aboutthe ones that maybe came to
market and didn't successfullyconsummate.
But there are, there arecertainly a number of those out
(36:28):
there.
That I would imagine some of thefolks here, or aware of.
But take a business likeindustry dot, for example native
digital B to B media, definitelyad driven.
And clearly there, the valuethat was perceived, by the
market generally, andultimately, by informative audit
(36:48):
it was pretty significant.
I think that and I couldprobably, ask, the group here as
well.
For other examples of nativedigital, businesses like that B
to B digital media businesses.
I think the problem with the addriven businesses and we're we
(37:10):
should talk about that directly.
Is that.
Native digital media, businessthat is advertising driven, but
it's still, it's generating dataand there's ways to monetize
that data, et cetera, et ceteraversus, let's say a comparable
company who has a higherpercentage or much higher
percentage of, traditionalprint, that's where you really
(37:33):
get that disconnect, I think, inan evaluation process, I think
you find that the native digitalmedia products are more.
Attractive kind of generically,then, the legacy.
And that's without talking aboutwhether or not there is a
subscription data revenue streamor anything that's, paid
(37:53):
content, anything of thatnature, just purely, ad driven B
to B business model a versus addriven, Model B.
So that I think that's afundamental reality, right?
And so if you are, in asituation where you have a lot
of that legacy and look, Ipersonally have been in that,
right?
I, when I started quest xbrought it out, from advanced
star.
We were 70 percent of ourbusiness was print magazines.
(38:17):
We were.
Actually, Tom I think Iremember, I got like the chump
award, if you will, from memberof BIMS that used to measure
everything in the B2B world, butwe were ranked, number two in
terms of print volume, papervolume after Penton.
So we had a massive challenge,right?
And, getting from that startingpoint, to, ultimately, where we
(38:41):
went, where we landed, andfrankly, where, Quest X is today
and where I hope they land,whatever that next round is.
You've got to really drive thatbecause you're, if you are, in,
a business that's got a lot ofthat legacy print in it, you've
got to find a way to ultimatelyenhance the overall value of the
enterprise and your digital andyour data strategy is a big part
(39:02):
of that.
And I'd say Tom Kemp.
Probably on this call, you'vegot more experience than I do in
that time, but how have youdealt with that at Northstar?
Because you've made a tremendoustransition there, right?
Yeah, I think that Reid'scomment, Tom's comment about
advertising is a little bit offbase because you have to really
differentiate what kind ofadvertising and performance
(39:23):
marketing versus displayadvertising.
Certainly in the worst examples,print advertising, which, and
when I joined North stars, likeyou carry 70 percent of our
revenue came from printadvertising today, it's 8
percent of our revenue.
And most of our.
growth in digital 32, 33 percentof our total revenue comes from
(39:45):
digital products right now.
But the growth there is not fromdisplay advertising on our
websites.
It's performance marketing, it'sABM marketing.
We've just launched the socialinfluencer program and trying to
go down funnel with intentmarketing and, but it's still,
it's advertising.
I mostly Google and medicine.
(40:05):
Revenue is advertising based onthat.
All advertising is bad.
It's how you connect that thecontext of it, and particularly,
I think, for B to B companies aswe go forward.
I think there's a huge advantagethat we have with cookies going
away.
is that our first party data,the combination of our first
party data, our trusted brands,and the context.
(40:27):
And when Disney is advertisingon X next to some hate, hate
posts or whatever, anti Semiticposts, that context in which
you're advertising and showingup is a huge impact on us.
So the more B2B.
The more we have valued content,a safe, trusted environment for
our advertisers and our sponsorsas well as tying that in with
(40:50):
first party data and performancemarketing, I think we're in a
great position and I think it'sgoing to drive value as we go
forward.
Right, Reid?
Yeah, I know.
I think so, too.
And I think I do think thatthere are certainly going to be
anomalies where there are peoplecreating businesses that are
still driven by advertising,like industry dive that Carrie
(41:13):
mentioned that did get a veryhigh valuation equivalent to
what a lot of subscriptionbusinesses get.
But, just from what, I'm hearingand I'm sure Tom Peck is hearing
as well from buyers.
There's just a there's been abig shift, I would say, in the
last 3 to 5 years, and everybodywants recurring revenue.
(41:36):
And you can get that fromsoftware.
You can get that from events.
I think are a good example ofthat.
You definitely can get that fromdata and information where it
gets trickier is advertising.
And that's yeah.
Why there's just so muchemphasis from buyers.
I definitely from private equitybuyers, but also in some cases
(41:56):
from strategic buyers becausethey know what is what elements
of in their business are reallycontributing to the overall
value.
We talk about this performancedriven data and Tom has been
mentioning about 1st party dataearlier this year.
The firm sold D zone to asmentioned to technology advice.
(42:17):
And D zone was a worldwide.
Profession for online communityfor software developers.
And the question that was posedus during the process of due
diligence throughout the entireprocess was that tell us about
the sales funnel.
So where we found out therecurring theme is if a company
is deep into.
Don't beyond just providing leadgen, but also involved in sales
(42:40):
calls or follow up or the saleitself.
There's a big lift in thatmultiple and that valuation.
So it's it.
I'm just trying to tag on here.
It's the sales funnel and wherethe company operates going
beyond just having someoneraised their hand.
I think a lot of companies havefound out this great raised her
hand, but are they actuallythose leads being followed up?
There's a group called inNashville junk crew.
(43:05):
And Mark, you may be familiarwith Jump Crew.
So Jump Crew is involved in thesales funnel process.
What they found out is that theywere generating leads for
insurance agents and for theinsurance companies.
But the agents were given theleads, but the agents never had
the appointment setting.
They never followed up.
And it was just a lost cause.
They then in turn said wait aminute.
We can do the appointmentsetting.
(43:25):
If they don't go to theappointment, we can parachute in
one of our guys and we'll sellthe business.
So fast forward, the company'sdone a remarkable job and going
throughout the entire funnel,and they really have no content.
It's all about.
But once again, it's in thiscase.
It's all about the digitalmarketing funnel and how to get
that lead and generate the leadand close that lead.
(43:46):
And that's what companies arelooking for.
And to the extent you can dothat, you get rewarded.
I can't help myself, but saythat my family business, which
was started in 1898 and was acompilation of, I think, at the
end in the print side, 38volumes of some kind sold to
Xometry in 2021.
And it was an advertisingbusiness, Thomasnet.
(44:08):
For, 300Million dollars thething with the advertising part
of this discussion, it is true.
It is the kind of environment ishighly digital.
There is a huge amount of firstparty data involved with the
searching and evaluation ofproducts.
There is a larger story there,but I agree that it's, not all
advertising is the same.
But the last point I'll make is.
(44:29):
If that's what buyers are sayingthey want, it's perceptions
reality, so it's good todiversify.
So we're we've got about fiveminutes left, and I wanted to
see if there's any questions orthoughts from, those of you been
listening, an opportunity toweigh in on anything we've been
talking about.
I'd like to ask Reed a questiongiven that, the M& A market's
(44:53):
been very soft over the last 18,almost 24 months interest rates
of cost of capital is muchhigher.
And but what's your outlook for2024 in terms of B2B?
And we've talked about thedifferent business models.
But what's your overall outlookand we're starting to see the
debt markets improvesignificantly more confidence
(45:16):
from that standpoint but a lotof vertical markets have been
had a very choppy year in 2023.
But what's your outlook, Reed?
Yeah, first I'll just say, Ithink your timing is exactly
right in terms of the last 18months because we started to see
a fall off about mid 2022 andthat's continued through all of
(45:38):
this year.
It's been hard to get, buyersand sellers together on
valuation.
It's been a big struggle.
The buyers are definitely moreconservative than they've been.
And sellers are still lookingfor prices that other sellers
were getting in 2021 that arejust not there today.
(45:58):
But I do think I'm veryoptimistic about 2024.
We feel we have a lot of dealsare going to close in the first
half of 2024.
And it feels like it feels likethere's more.
Impetus to get deals done thanthere has been.
I think there are sellers thataren't going to just hold out
(46:21):
for, exactly what they want, butare going to be more willing to
compromise.
And that is required in Thecurrent deal environment.
And as you said, I think I thinkto some degree, I've always
found that the deal marketfollows the stock market.
And it used to be, there used tobe a lag, but now it's more
immediate.
And so with the stock marketkind of resurging up until the
(46:43):
last three or four days that.
Makes buyers, more optimisticthat they can, they can put
money to work and they're notbuying at the wrong time.
So that's why I think you'reabsolutely right.
We're very bullish on 2024 rightnow.
There's a huge amount of drypowder among private equity
firms that have committed fundsand haven't been able to put the
(47:06):
money to work upwards of 2trillion.
And also on the private debtmarkets on these debt funds,
they've raised funds and thoseguys have to put the money to
work as well.
So I think you're right.
I think 2024 should be a turningpoint.
Paul, you have a question?
Yeah, it's more of a comment.
(47:26):
I've spent my whole career inLatin America and here, I
certainly know, and I've worked,I've been on the company I work
for has been acquired twice.
And I know that overall, ingeneral, in Latin America, our
quality of data and thewholeunknown.
Data that we have is much lessthan what is the case for, U.
(47:48):
S.
companies.
I just wanted to hear anyopinions of, what people think
of that when it is a bigmultinational that has such a
mixed bag of products around theworld where, it's just very
obvious that some places thedata is not going to be in the
same shape that, it is with a U.
S.
or Canadian company.
(48:10):
Yeah.
Oh, go ahead.
I was just gonna say I think itdepends if buyers are gonna
focus.
We're doing a deal right now andwe just did another one recently
where most of the revenue was inthe us but we've had revenue and
the UK and Australia, and thebuyers really they'll, in
diligence, they're going to lookat everything, but they're
(48:30):
really going to be focused moreon the U.
S.
or where the heavierconcentration of revenue is.
If the heavy concentration isn'tLatin America that's where the
focus is going to be.
And I think it's gonna be it'llbe a little bit more challenging
if you're trying to sell to a USbuyer, I imagine.
Any other thoughts, feedback,comments, questions before we
(48:50):
close out really quickly?
I, you mentioned Heather aboutas by the environment.
I still think it really comesdown to the quality of the
asset.
Yes the mark, the markets play arole in it, but for my
experience has been ourexperience has been whether it's
in the software technologycompanies that we're working
with or media companies.
At the end of the day, it reallycomes down to the quality asset.
(49:12):
If they can pass, quality ofearnings, how well, how good
their shop is, what kind ofshape it's in.
Once you start going sideways onthat, you can never catch up.
It just affects the multiple,the, the valuation.
And so to the extent thatsomeone has their, I'll call it
their act together before goingto market, they're going to get
rewarded.
They have a great managementteam.
At the end of the day, we'restill people at five o'clock go
(49:34):
on, now they're working fromhome.
So we never know, but, but atthe end of the day it's still a
people business.
Yes.
It's driven by data, qualitativeor quantitative.
Yes.
It's but.
Once again, it gets down to realrevenue, real cashflow, and
great people.
And that's a great, and that'sthe mix.
And to the extent that we canstory, tell that you get
(49:54):
rewarded.
Agree.
Data's the fuel.
That's how I like to thank youeveryone.
Appreciate it.
And we'll be, thank you Heather.
Yeah, thank you Heather, fororganizing this.
Thanks.
Thanks, Heather.
I just want to know, Tom Kemp,what bird is it behind you?
Did you have?
What's that?
What kind of bird is that?
Are you the bird?
(50:14):
Oh, sorry.
I am.
Sorry.
I am the one with the bird.
Let's see.
Can you flip the screen around?
It's over in the corner, but I'min Mill Valley, California,
surrounded by redwood trees.
That's beautiful.
Tom, I thought that was theeagle from Eagle Tree.
Carrie, great to see you.
(50:36):
Likewise, thanks, guys.
Bye, everybody.
It's Daniel.
Heather Holst-Knudsen (50:39):
You can find us@2klabs.com.
Thank you.
Thank you for listening to TheRevenue Room by H2K Labs.
Subscribe to our channel today.
Welcome to the Revenue Room,presented by H2K Labs.
(00:05):
Here's your host, HeatherHolst-Knudsen.
I'll just start off by welcomingeverybody to our fireside chat
Heather Bolts Knudson, and theCEO and founder of H2K labs.
I have a very deep background inB2B media and events and digital
(00:25):
information.
And my company right now isfocused on helping what I call
business informationorganizations improve the way
that they do business usingdata.
And part of that is improvingvaluation.
And if they're in the market toeither acquire or be acquired or
gain investors, how data canplay a very significant role.
(00:47):
The purpose of the fireside chatis to be highly interactive.
So when you are available andable to please put yourself on
video.
And either raise your hand orcomment in the chat, but it's a
small group, so we should, nothave any issues in terms of
either having people participateor ask questions.
And I have 2 very illustriousguests as my core panelists.
(01:10):
I have Carrie Gumas, who is theCEO of Metacomet Ventures.
Many of you actually alreadyknow Carrie.
But he was the co founder andCEO of Questex, which he sold to
Mid Ocean Partners in 2018.
And we have Mark Zadel, who is astrategic finance executive and
the former CFO of EndeavorBusiness Media actually as of
(01:33):
quite recently.
Kerry, you want to do a littlebrief background?
Sure.
I guess first of all, it's apleasure to see everyone.
Thanks to Heather.
For organizing this session.
Most I think I know most of you.
But, my background is 40 plusyears business media events,
information in a wide range ofcompanies from startups to the
(01:55):
large read, read global players.
And obviously, with the foundingof quest X.
Middle market, private equityowned media business.
When on this particular topic Ican say I've had a lot of
experience, some of that good,some of that definitely in the
bucket of lessons learned andhopefully can help others
benefit from some of thatexperience.
(02:17):
Terrific, Mark.
Yeah, good morning all.
So as Heather said, I wasrecently the CFO of Endeavor
Business Media, which when Ijoined nearly 2 years ago, I had
come from a background where inthe investment business, I
followed companies like Disney,Time Warner, Viacom, Comcast,
and thought I knew media reallywell.
(02:39):
Which I guess I knew one type ofmedia, but B to B taught me it's
a completely different animaland I think has different data
needs and just different ways tolook at the business versus some
of those other traditional formsof media.
And so I think in one of thoseis from a data perspective, I
think you have to look at ituniquely.
And so having had experiencedmyself in different finance
(03:03):
roles and insurance and softwareand distribution allows me to
some degree to take some ofthose paradigms and apply them
in a different environment.
And ultimately use the data.
To come up with actionable stepsand then push that culturally
throughout the organization sothat the company can function on
(03:23):
its own.
I enjoy doing that.
I've done that with pretty muchevery company.
I've been at including endeavor.
And so it's fun to be here withyou all to talk about it and to
some degree evangelize it.
Perfect.
Yeah, This is supposed to, as Imentioned, be very interactive.
So I thought Reed, do you wantto do a quick intro in case
there are people on here thatdon't know you, which I find
(03:45):
highly unbelievable, but itwould be great to do a quick
intro.
Yeah, sure.
Yeah.
Thank you, Heather.
I'm Reed Phillips.
I'm the co founder of Oakland'sto Sylvan Phillips.
So we're an investment bankbased in New York that focuses
on media marketing informationand more and more software.
We have about 25 full timepeople, and we also have a
(04:08):
number of senior advisors, andwe're part of a global group
called Oakland.
So we have access to, Otherinvestment bankers and 45
countries and collaborate a lotnow on international deals.
Excellent.
Excellent.
Thank you Scott, you're fromCanada.
I believe you want to do a quickintro.
(04:30):
Or Heather.
Yes, I'm Scott Jameson withAnnex Business Media.
We are a B2B media company outof Toronto and the rest of
southern Ontario.
We have 60 B2B media brands anddo about 75 live events a year.
We still print our ownmagazines.
I know that's a bit of athrowback.
We have our own printing press,print our own magazines take it
right to the root.
(04:51):
And thanks Heather for theinvitation.
Terrific.
Terrific.
And Tom Pecht, you're you areone of Mark's guests.
Thanks everybody.
I know a number of people here.
Tom, how are you doing?
It's been a while.
Great.
Great.
Good to see you.
Great.
You too, Tom.
So it's all good.
So I'm, so about 3 years ago, Iformed a new company called TI
(05:15):
Partners out of Atlanta.
Along with Derek Shawty's formerMorgan Lewis.
We figured out finally that thebest way to get out on the
highway is to hire a bunch ofsmart MBAs from Emory.
We've been off and running.
We actually do a lot moresoftware technology enabled
services.
We're in the market right now,for example, with a a company
that's in multilingual chatusing AI or call centers.
(05:37):
So we actually have segued alittle bit away from media.
Having said that, Earlier thisyear, we did a deal with Wolters
Kluwer and and also sold a anonline software community as
well to I think it was techadvice up in Nashville.
So still in media, not as muchmore software, but there you go.
(05:58):
We love the business and lovemedia.
And it's great seeing you guys.
I think we're the last manstanding here in this field.
All of us.
Thank you.
And Ryan Delahunty.
I don't know if you've got hereyour video on, but I believe
you're here.
I'm here.
Quick intro meeting hopping.
Can you hear me?
Okay.
(06:19):
Good.
Good.
Ryan Delahunty work with Gardnerbusiness media.
We're a family owned andoperated Discrete part
manufacturing media companybased in Cincinnati, Ohio.
We've got brands all over NorthAmerica as well as three brands
in Mexico.
We're in the event business, thedigital space, as well as the
print media business.
So thanks for the invitation.
Terrific.
Terrific.
And then Steven Acunto, I'mgonna pop over to you.
(06:42):
Yeah.
Good afternoon.
Thank you for organizing thegroup.
You always put together a goodgroup.
I'm sorry.
I was a few minutes behind.
Junior.
We my father and I put togethera holding company four years ago
to go out and acquire one of theleading titles in the risk and
risk management and risk andinsurance space in the U.
S.
And then we went out and boughtfive, four more businesses three
(07:03):
of them over zoom in 2020 and2021.
So we've rolled up a bunch ofbusinesses in that space across
a numeric geography, NorthAmerica, EMEA, and South China,
Asia.
So I oversee operations anddevelopment for the group.
(07:23):
Terrific.
Thank you.
Tom, welcome.
Nice to see you.
Hi, Heather.
Thanks for inviting me.
And as soon as I saw my goodfriend, a guy who I have huge
respect for, Kerry Gomez, on theprogram, I had to sign up for
this.
And so Here carries words ofwisdom about data driving value
and read it's great to see youTom.
(07:45):
It's great to see you too.
Yeah.
So I'm Tom Kemp.
I'm chairman of North StarTravel Group.
I was for 14 years chairman CEOof North Star Travel Group.
It's a leading B2B informationand events company and serving
the global travel industry,which is a great industry to be
in.
It is a great industry now, butduring COVID was hit pretty
hard.
(08:05):
We're looking at our potentialexit relatively.
Near term and data and drivingdata and intent data and all
that is a hugely important partof our strategic plan.
So thanks.
Absolutely.
Paul say no more.
I'm glad to see you back on.
Yeah, took me a minute.
But here I am.
(08:25):
Hello, everyone.
I know, certainly some of youhey, Carrie I have been working
at the B2B events business herein Mexico for.
32 years and our company Tarsus,as you see, the logo was just
recently acquired by Informa andI will be leaving the company at
the end of this year.
(08:46):
And and so I'm interested injust talking to you guys and
listening to what you have tosay.
And yeah.
Terrific.
Terrific.
And just my team is on here.
Scott Evans is a partner ofours.
So Scott, I know, some of thesepeople quick intro and then I'll
introduce my team and then we'llkick off.
You're on mute.
(09:07):
I do know a few of the faceshere.
It's great to see some guyscarry.
It's it's a pleasure to be backon with with such an an
experienced group of people.
The last man standing statusalso gives you a lot of
interesting insights that I'mhoping to benefit from.
I started my career in theagency business.
I was with Gray Advertising andMadison Avenue for 11 years, and
(09:29):
then moved on to a littlespinoff called Razorfish, which
was the first digital agency.
In in the world, believe it ornot.
And from there I started doingdigital innovation work at
Razorfish for a bunch of CPGcompanies, and then made my
break into the event space whereI I took a job as innovation
director for read exhibitions inNorwalk, Connecticut.
(09:51):
I worked for Chet Bruchette, ifanyone knows that name.
And that was an interestingexperience.
I really.
Did not know much about theevent space.
But that program was a wonderfulimmersion into the global events
business.
Did a lot of a lot of work withcustomers, looking for those
hidden sort of insights thatcould lead to revenue and growth
(10:12):
and data.
Was a big part of that story.
After I left read I joined acompany called balloon, which
some of you may be familiarwith, we're a two sided
marketplace where we enhancephysical trade shows with a with
a product discovery, servicediscovery marketplace, and
recently partnered with Heatherand H2K to dive deeper into what
I think is one of the biggestchallenges facing the event and
(10:35):
media business, which is.
Which is the data side of thingsand and bringing an industry
that may be lagging a bit inthat area up to up to speed.
Pleasure to join you guys andI'm looking forward to the
conversation.
Great.
That actually is a great way tokick off the conversation and to
put some context around data.
What do we mean by data?
(10:55):
Many companies call themselvesdata driven.
I recently spoke about this andI think they're data aware
versus being data driven.
And I also think there's a lotof confusion about, what does
that mean?
I recently participate.
Took a course MIT offers on datamonetization and they have a
very good framework called IWS.
The I stands for improve.
(11:16):
It's how you're using data toimprove what you're doing
internally.
From reporting or predictiveanalytics or gaining deeper
customer understanding.
All of those things add cash tothe bottom line, or are supposed
to.
The second part of thatframework is the W, and that is
actually how you are starting tocommercialize data.
(11:36):
And that is wrapping yourexisting product set with
enhanced data analytics toeither improve your customer
retention Increase wallet sharecreate an upsell opportunity,
but it's based around whatyou're currently selling.
And it's the next step becauseyou don't have to do any sort of
(11:57):
you don't have to do much interms of organizational change
to actually activate that.
And the third part is sell.
And that is the taking your dataand creating a brand new
monetizable product that you aregoing out and selling as a
subscription that actually doesrequire huge amounts of change.
In the business which is whyit's last and really that
(12:18):
framework, they're allintertwined.
You cannot do w without the I ws.
And all of that leads to how yougo to market as a business.
Whether you're, you're acquiringcompanies or you would like to
be acquired or you're seekinginvestment.
So that is how we will beapproaching data within the
(12:39):
context of this discussion.
I'm going to kick off with our1st question.
And I'm going to throw this outto carry 1st, which is how to
integrate data valuation intoyour overall strategy when
assisting or engaging in amerger and acquisition.
Activity and have metricschanged, from when you sold
(13:00):
quest X in 2018.
And what you're seeing now areinvestors.
Also expecting and asking fordifferent types of metrics than
they were before.
Yeah, thanks, Heather.
That's that's a great way tostart the conversation off and I
think.
Everybody that's probably onthis zoom can relate either as a
(13:21):
buyer or a seller, anintermediary.
Thanks that, the process ofvaluing and either buying or
selling a business is extremelydata intensive, in and of
itself.
The process, is data intensive.
And I think over time,certainly, 1 of the things that
you see is that I W.
S.
Model that you reference.
I tend to think about it is.
(13:43):
Performance related data on theone hand, and product or
productize, data on the other.
That's either being used for UXto improve customer experience
or strictly, to monetize andcommercialize as you go through
and you evaluate businesses.
One of your first impressionsthat's generated in the context
(14:04):
of an M and a transaction, isthe performance related data,
right?
It's the accounting.
It's the business metrics aroundthat.
And, certainly I can think ofmany different situations where,
you know, that first impressioneither attracted you even more
or attracted you less.
Because of the quality of thedata and the information, right?
(14:25):
When you ultimately get to, theproductized, data definitely
there's been a change, and a lotof that obviously has to do with
the business model, right?
The underlying business modelsmoving from, analog to The
digital business modelscertainly pushes you to evaluate
and look at the data a littlebit more carefully.
You know what I would say, andmaybe I wouldn't put this in a 5
(14:46):
year time frame, but let's say10.
Is that if you're if you wereeither preparing a company, for
sale and preparing it, preparingits data room and preparing it
for due diligence and managerpresentations, what have you.
Or on the other side on the buyside, if you were getting ready
to conduct an evaluation.
10, 10 years ago, you might havestopped your data assessment, at
(15:10):
a numbers oriented evaluation,right?
Nu numbers of attendees, numbersof subscribers, various, metrics
around that.
The validity of, the company'srepresentation of what was
actually in the database, right?
And maybe you had a a furthertechnology assessment that leans
(15:30):
more towards the the technologyplatforms, that the company was
using.
But I think that flash forwardto where we are today.
And I think this is an entirepillar of whether it's due
diligence that's being conductedon the buyer side or,
preparation, by companies thatare that are operating their
(15:51):
businesses and considering anexit.
There's an entire pillar of datavaluation and the process and
around that, that increasinglyis a critical driver, of the
attractiveness, of theparticular asset and ultimately,
the valuation.
And there are they, There aresome very specific methodologies
(16:12):
that are brought to thatprocess.
And I think I'd defer here to,maybe, read and Tom it is guys
that are helping companies onboth sides of the buyer, seller
line, but that data valuation isreally a really critical part of
it.
The due diligence, theevaluation process, and the last
thing I'll say there is thatthat you have to remember as a
(16:35):
seller, you're running abusiness, right?
You're, you built it, you'rerunning it you're doing all the
things that you need to do to besuccessful, you're monetizing,
or in some cases, not monetizingbut each buyer that's out there,
has their own perception of whatis valuable in your business,
And they also have their ownbusiness model, their own
(16:56):
methodology, for how they goabout conducting business and
with regard to data, monetizingthat, right?
So part of the art of, gettingthe company, positioned and
driving, the greatest value forit, I think, in the M& A
transaction.
Is really understanding andbeing able to communicate to
those very different, buyerperspectives, given different
(17:18):
businesses are looking for, fordifferent things to be added
into their business and they mayvalue it a little bit
differently.
And it's why I place a prettyheavy emphasis on a really
thorough data data valuation legbasically of the the the process
for, preparing a business, forexit.
(17:39):
That's really interesting.
The things, the data points youwere talking about earlier, like
attendees and subscriber, all ofthose are what I call today and
yesterday numbers, so laggingtheaters what I've been hearing
and actually Tom and read.
I actually, I'm going to call onyou and Mark on this 1 is.
Cost of CAC, right?
Customer Acquisition Costs NetRevenue Retention Lifetime
(18:04):
Value, and not just on, theadvertiser or sponsor or
exhibitor side, but on theaudience side.
And Expansion.
These are what I call health.
Indicators, and it's a hugestruggle.
And Mark, I'll call on youfirst, just because I know you
and I've been talking about thisfor a while, but, what's your
experience with this?
(18:24):
Yeah.
So some of the uniqueness aroundB2B is a few things.
One is you have two customers,right?
You have advertisers and youhave audience and you have to
keep them in sync through B2B.
The glue of that, which is thecontent and so while content is
not easy to measure it issomewhat measurable in terms of
what you're putting out there.
(18:45):
And I think being able to atleast track or understand, is it
short form long form.
Evergreen, is it strategicsomehow bucket ties it in a way
that you understand how you'reapproaching the market and know
what's holding togetheressentially your revenues in
line with your audience theother as you address the whole
(19:05):
lifetime value.
Concern with audience, it's it'san exhaustible asset, right?
Every audience member is thevalues going to erode over time
as you continue to use them.
And I don't mean that in apejorative way, because it could
be helpful to them too, but overtime, there's a sort of a
(19:25):
depreciable element to that.
And Tom, you're preparing for anevent with Northstar in, and
you've been through this rodeomany times.
Is it different now?
And are you being asked to puttogether data that I, that we
just described in terms ofthese, the leading indicators,
(19:46):
the health of the businessversus the normal stuff?
Yeah, I think it's changeddramatically over the last few
years.
And I think the accelerationthrough COVID, particularly its
impact on what had beenparticularly event driven
companies carry with all of hisexperience.
Noses is it's changeddramatically in that.
(20:07):
And North Star has always been aomni channel company, marketing
company that connects buyers andsellers through all different
channels, through content,through software, through
through our face to face eventsour digital media products.
But more and more importantly,as we go forward is first party
data.
You have your top of the funnel.
You bring in bring in your usersand audience through the top of
(20:30):
the funnel and bring'em throughthe bottom of the funnel and
converting them to to knownusers and then to behavioral
data and then intent data.
And I think the a big trend andthe more we can.
Focus on performance marketinglower in the funnel.
So you can draw the parallelsbetween spending money on
(20:50):
promotion and advertising andsponsorship and connecting that
with a sale and performance.
And so a lot of what we're doingnow is focused on building that
first party data building.
understanding behaviors of thatfirst party and then intent data
and connecting that to atransaction.
(21:12):
And so it's become much moreimportant.
I think as we go forward for aperiod of time, as Kerry Weld
knows, a lot of buyers andinvestors were looking at, in
some cases in B2B, primarilyevent driven companies.
And now they're looking foromnichannel companies that can
monetize their audiences in therelationship with sponsors and
(21:33):
advertisers in a much more fullway.
And I think it has changeddramatically but particularly
with cookies going away thatfirst party data, as well as the
context.
Of the content that you have andthe closer alignment you have
between your your content andthe environment in which people
are promoting their products andthe context and the content of
(21:55):
that is much more important.
Thank you.
No, absolutely.
And read, you're heavilyinvolved, obviously in, in
putting together buyers of withacquirers.
And this must be something onboth sides of either doing it
really well and they get it ornot.
What's your perspective?
Yeah, as everyone else has said,and I agree completely.
(22:17):
The process of, buying andselling companies is much more
rigorous when it comes to duediligence.
For example, one of the bigchanges.
Is that almost every buyer thatwe're encountering requires a
quality of earnings beforethey'll close on the
transaction.
A lot of times the sellers willtry to preempt that and do their
own quality of earnings.
(22:38):
But that's an example of just.
A lot more data, a lot more,rigorous examination of each
business before they'reacquired.
And then when we're involved insoftware companies, there are
just a lot of statistics andthings that buyers are going to
expect and that's starting to.
flow into B2B deals as B2B mediacompanies get more complex and,
(23:03):
as they're doing more with data.
I put the hierarchy in terms ofvalue at data and information is
the highest value that you canwhen you're attributing value to
a B to B media company, eventsand subscriptions come next.
Not all B to B companies havesubscriptions.
And then after that, it'sadvertising driven businesses.
(23:26):
We found really I would say,since since Covid, we found,
Less and less interest inadvertising driven businesses
become a more of a struggle tomove those companies.
So if you have an advertisingdriven business, I would
strongly recommend that you addon, as Tom was saying, events
and data and just be a multichannel business that's going to
(23:52):
be of much greater interest toacquirers.
And and there are just somereally impressive examples now
of B to B media companies thatare using data in really
interesting ways and monetizingit.
And creating a lot of value fortheir companies.
Randall Riley's a very goodexample of that.
(24:13):
Oh, yeah.
They've been doing great.
By the way.
Congratulations.
The Taunton Press and ActiveInterest Media team.
That was big.
Thank you.
Thanks, Tom.
Thanks very much.
So any questions on this topicbefore I go to the next
question?
All right.
Actually, I was going to asksomething about due diligence,
(24:35):
but I think I want to go to Onethat I'm going to go to the
value real, the valuerealization question because
I've actually heard this issuetoo.
And that is one of the biggestinvestment thesis is when you,
when I, when a media company oran event company is buying
another one or private equitybusiness is going out and
saying, I want to add to myportfolio is that you plus two
(24:58):
equals 10.
That there is a convergencegoing that's going to happen on
audience on advertisers andsellers and data and then the
acquisition takes place and thenyou have this.
Oh, wow that's not happening theway we wanted to the data's in
the way and, there's a lot ofeither delay or.
(25:19):
Sometimes failed acquisitions.
Carrie, you were recently talkabout without naming names your
experience with this.
Yeah that's that's a good one.
I can probably give, that sortof a half dozen, examples of of
the great, the great stories.
I want to think of somethingthat's a little bit more, more,
(25:40):
more recent, right?
And I've got to be careful aboutnaming names, but let's say that
you've got a business that'sprofiled that's financially, got
very attractive characteristics,right?
It's somewhere, for as an add onbusiness in particular to put it
in those terms, right?
Growing at double digit, rateswith, 30%, EBITDA margin, right?
(26:00):
On a relatively large, 10 15million revenue base, right?
So just from the from that,profile alone, you know that
you're going to get, a certainlevel of interest, right?
Because it's got, some financialcharacteristics that are going
to be attractive.
And, if it's in the rightvertical that that a buyer has
prioritized, you're going toget, very strong interest.
(26:23):
The difference between, acompany that it has really
thought about, data as astrategic asset and a driver, of
enterprise value.
And has made the investment, inin its data in its capabilities
and its platform.
Let's say the differencebetween, having done that and
(26:46):
let's say a company that'staking a more legacy organic
approach.
The difference there is reallystarts with a very binary
decision, right?
Buyers and I've experienced thispersonally, right?
Where company a that Idescribed, attracts A lot of
buyers, a lot of buyer interest,particularly in the 1st round
(27:08):
company B gets that initialinterest, but very quickly there
is a fall off because it justdoesn't show.
Because the right the datahouse.
Is not in good order.
Taking it another step further.
And really driving a premium,valuation of premium above
average, premium multiple,right?
(27:30):
Part of that is We I think weall know, like part of this
timing related, right?
We're hitting the market at theright time, with the right
asset.
And you've got, enough enoughbuyer activity, but.
On that initial impression,right?
There is the next, level of canthat company, stand the test, of
due diligence on a very rigorousdue diligence process.
(27:51):
And the thing that I thoughtthat was interesting about the
comments that Mark made Mark,Tom and read is that we're
seeing a lot of software,evaluation methods.
And metrics.
Coming into the evaluationprocess, you know of b2b, right
(28:13):
the more digital our businessesare The more digital platforms
are fundamentally about businessyou know the more we're hearing,
mrr ar clv cla I could go onwith the alphabet soup right of
metrics and analytical toolsthat are being applied right?
But these are in many ways likethey're coming from analytical
(28:35):
processes that have been used toevaluate data and information
and software businesses, for areally long time now.
We're, we're seeing them in B toB.
So if you don't reallyunderstand what those analytics
are, what they're all about andthe business isn't really there
for, ready to come under thattype of evaluation, that type of
(28:55):
scrutiny.
Let alone whether it'sperforming right at a right
level.
But, if you're not ready forthat type of analysis.
You're going to diminish thevalue ultimately, the return to
the shareholders because thebusiness may simply, get a turn
of a, complete, full multiple ormaybe even to less value, versus
(29:17):
the company that is preparedthat does have the data that can
show it.
They can demonstrate it overtime.
It can stand up to the bevy of,accountants and technical
advisors and what have you, thatare going to be in under the
hood, right?
So I think that's the way that Iwould, frame it.
Yeah, I actually, this is thereally tragic part about it.
(29:38):
It's always frustrated me withmedia and events companies is
that the data is there.
It is absolutely there.
And actually, it is plentifuland very rich.
But because of lockages in termsof getting that view and, it is
(30:00):
prevent you could be losingvalue simply because you don't
have the right data stack inplace.
And Mark, I'm going to throwthis over to you.
And you're not just a CFO, youare a value creator.
And what's your advice?
Yeah, so there's a foundationalpiece to this, which you were
alluding to.
If you have the data, you shouldbe leveraging it.
(30:21):
And it should when you provideit through the data room, it has
to tie in with whatever storyyou're telling.
And you have to know that beforeyou present it to a potential
buyer if you're on the sellside.
But I think there's, I thinkthere's a couple other pieces
which could have a very heavyinfluence on value that are
(30:42):
aren't often used, especially atthe smaller end of transactions.
But as you start to get into the50, 100, 200 million range
really should be table stakes.
And one of those is good CRMdata.
And that CRM data needs to tellyou what are the activities of
the Salesforce, by person, whatkind of disposal rates do they
(31:04):
have?
What kind of win loss rates dothey have?
What's the underlying activitydriving the sales?
And one of my favorites isalways have it is to make sure
you have a paradigm orunderstanding around.
Where are you actively sellingversus where is someone taking
orders and to at least know howto manage match that value prop
(31:27):
with a cost so that youunderstand if it's order taking
that's at a minimal cost if it'screating value through an active
sales process, there can be aheavier investment on that and
customer acquisition costs couldbe higher because you'd expect a
bigger benefit.
And then the other area, which.
Okay.
I think is probably not tablestakes now, but is becoming so
(31:49):
is just buyer intent and havinga just a deep understanding of
what's happening to youraudience and their journey and
being able to use that toleverage a discussion with
customers around R.
O.
I.
So that the company ismaximizing its revenue and
pricing.
Right and Tom, I don't know ifyou want to weigh in on this.
(32:10):
I think it's pretty interestingthat you used to, or you still
have engaged, but you're, youwere very focused on media.
And now you've moved into moreof the technology and
information type businesses.
Is that correct?
(32:32):
And with that, if, a mediabusiness were to come to you
today and say, Hey, Tom, help usout.
No, like seeing the differencebetween the two sides what
advice would you give?
My first advice would be if Iknew the potential client, I
said we should have went tomarket 10 years ago.
Because what you think you havenow is not worth the price of
the Queen Mary.
That's just being brutally, ifthey're an advertising driven
(32:54):
firm.
I hate to be brutally honestabout it, but that's an ongoing
issue that that we'll have.
If you haven't made the, I callit the leap across the digital
divide, you're going to not getthe outcome you expect.
And we've seen that time andtime again.
Everybody in this in thisconference call.
I've seen that and it's nosurprise where I were.
(33:15):
Interestingly enough here.
We've been talking aboutquantitative data recently.
I've seen on the radar screen.
Now, in terms is qualitativedata.
And measuring that it can bemeasured.
And, what really, my qualitativedata is observational data, are
we conducting is a way tocapture through interviews or
(33:36):
focus groups or evenquestionnaires buyer intent.
So there's obviously there's.
Quantitative data, but it's aqualitative data has now learned
to mix and strange andinteresting enough.
We're seeing that even insoftware companies that we're
selling is that how are youmeasuring to Mark's just recent
(33:56):
point about that CRM data?
There's more to it than justwhat's driving sales, and that
actually qualitative data.
That's what we that's gives thehaving that gives an extra to
lift another turn, so to speak,on that multiple at the end of
the day.
But to go back to the originalquestion, if someone comes to me
today, the first area I'm goingto go to is everybody else is
(34:20):
which, show me your series fromyour sales pipeline.
Show me wins and losses.
I want to really get this intothe bowels of the business and
see how it's operating.
And I also want to understandabout the content you're
producing.
Content still drives intent, sowe can't miss that.
And is that your content?
Do you form that out to people?
Show me that, and then I cancraft the story.
(34:40):
And it's all about thestorytelling.
We, together here, everybody inthis, on this call, are great
storytellers, or else wewouldn't be in media.
So to the extent that we cantell the story, the more, the
more interested buyers we'regoing to have.
That's really interesting and Ijust drew this or this 4 big
points that I think have beenmade during this call is.
(35:01):
1 is having your data story andhouse in order and make sure
you're telling the right storyahead of time.
The 2nd is you need to have theright qualitative data.
Those leading or revenue healthindicators.
And you're adding in thequalitative data, which is my
data.
So good, whether it's my contentor my CRM that I actually can
(35:21):
see and identify.
Trends that are happening or,opportunities.
And it's not just close one orclose loss rates.
It's, maybe customer segmentgrowth that, in areas we didn't
anticipate.
And then the last one really isis data products.
The real true data monetizationthat you are.
You're taking this incredibleasset that you have, and you are
(35:43):
creating a product that can be,moved into a, a repetitive
revenue stream, but it's helpingyou diversify away from
advertising.
Those are the four points I'vetaken away so far.
And I actually thought your lastpoint that you said CRM and
content, you'd actually didn'tbring up audience.
Yeah, actually, I just want topush a little bit on that point,
(36:05):
though, right?
About advertising businesses,because not all advertising
businesses are the same, right?
So and in B to B media, right?
We let's we can look at a fewreference transactions.
So I probably can't talk aboutthe ones that maybe came to
market and didn't successfullyconsummate.
But there are, there arecertainly a number of those out
(36:28):
there.
That I would imagine some of thefolks here, or aware of.
But take a business likeindustry dot, for example native
digital B to B media, definitelyad driven.
And clearly there, the valuethat was perceived, by the
market generally, andultimately, by informative audit
(36:48):
it was pretty significant.
I think that and I couldprobably, ask, the group here as
well.
For other examples of nativedigital, businesses like that B
to B digital media businesses.
I think the problem with the addriven businesses and we're we
(37:10):
should talk about that directly.
Is that.
Native digital media, businessthat is advertising driven, but
it's still, it's generating dataand there's ways to monetize
that data, et cetera, et ceteraversus, let's say a comparable
company who has a higherpercentage or much higher
percentage of, traditionalprint, that's where you really
(37:33):
get that disconnect, I think, inan evaluation process, I think
you find that the native digitalmedia products are more.
Attractive kind of generically,then, the legacy.
And that's without talking aboutwhether or not there is a
subscription data revenue streamor anything that's, paid
(37:53):
content, anything of thatnature, just purely, ad driven B
to B business model a versus addriven, Model B.
So that I think that's afundamental reality, right?
And so if you are, in asituation where you have a lot
of that legacy and look, Ipersonally have been in that,
right?
I, when I started quest xbrought it out, from advanced
star.
We were 70 percent of ourbusiness was print magazines.
(38:17):
We were.
Actually, Tom I think Iremember, I got like the chump
award, if you will, from memberof BIMS that used to measure
everything in the B2B world, butwe were ranked, number two in
terms of print volume, papervolume after Penton.
So we had a massive challenge,right?
And, getting from that startingpoint, to, ultimately, where we
(38:41):
went, where we landed, andfrankly, where, Quest X is today
and where I hope they land,whatever that next round is.
You've got to really drive thatbecause you're, if you are, in,
a business that's got a lot ofthat legacy print in it, you've
got to find a way to ultimatelyenhance the overall value of the
enterprise and your digital andyour data strategy is a big part
(39:02):
of that.
And I'd say Tom Kemp.
Probably on this call, you'vegot more experience than I do in
that time, but how have youdealt with that at Northstar?
Because you've made a tremendoustransition there, right?
Yeah, I think that Reid'scomment, Tom's comment about
advertising is a little bit offbase because you have to really
differentiate what kind ofadvertising and performance
(39:23):
marketing versus displayadvertising.
Certainly in the worst examples,print advertising, which, and
when I joined North stars, likeyou carry 70 percent of our
revenue came from printadvertising today, it's 8
percent of our revenue.
And most of our.
growth in digital 32, 33 percentof our total revenue comes from
(39:45):
digital products right now.
But the growth there is not fromdisplay advertising on our
websites.
It's performance marketing, it'sABM marketing.
We've just launched the socialinfluencer program and trying to
go down funnel with intentmarketing and, but it's still,
it's advertising.
I mostly Google and medicine.
(40:05):
Revenue is advertising based onthat.
All advertising is bad.
It's how you connect that thecontext of it, and particularly,
I think, for B to B companies aswe go forward.
I think there's a huge advantagethat we have with cookies going
away.
is that our first party data,the combination of our first
party data, our trusted brands,and the context.
(40:27):
And when Disney is advertisingon X next to some hate, hate
posts or whatever, anti Semiticposts, that context in which
you're advertising and showingup is a huge impact on us.
So the more B2B.
The more we have valued content,a safe, trusted environment for
our advertisers and our sponsorsas well as tying that in with
(40:50):
first party data and performancemarketing, I think we're in a
great position and I think it'sgoing to drive value as we go
forward.
Right, Reid?
Yeah, I know.
I think so, too.
And I think I do think thatthere are certainly going to be
anomalies where there are peoplecreating businesses that are
still driven by advertising,like industry dive that Carrie
(41:13):
mentioned that did get a veryhigh valuation equivalent to
what a lot of subscriptionbusinesses get.
But, just from what, I'm hearingand I'm sure Tom Peck is hearing
as well from buyers.
There's just a there's been abig shift, I would say, in the
last 3 to 5 years, and everybodywants recurring revenue.
(41:36):
And you can get that fromsoftware.
You can get that from events.
I think are a good example ofthat.
You definitely can get that fromdata and information where it
gets trickier is advertising.
And that's yeah.
Why there's just so muchemphasis from buyers.
I definitely from private equitybuyers, but also in some cases
(41:56):
from strategic buyers becausethey know what is what elements
of in their business are reallycontributing to the overall
value.
We talk about this performancedriven data and Tom has been
mentioning about 1st party dataearlier this year.
The firm sold D zone to asmentioned to technology advice.
(42:17):
And D zone was a worldwide.
Profession for online communityfor software developers.
And the question that was posedus during the process of due
diligence throughout the entireprocess was that tell us about
the sales funnel.
So where we found out therecurring theme is if a company
is deep into.
Don't beyond just providing leadgen, but also involved in sales
(42:40):
calls or follow up or the saleitself.
There's a big lift in thatmultiple and that valuation.
So it's it.
I'm just trying to tag on here.
It's the sales funnel and wherethe company operates going
beyond just having someoneraised their hand.
I think a lot of companies havefound out this great raised her
hand, but are they actuallythose leads being followed up?
There's a group called inNashville junk crew.
(43:05):
And Mark, you may be familiarwith Jump Crew.
So Jump Crew is involved in thesales funnel process.
What they found out is that theywere generating leads for
insurance agents and for theinsurance companies.
But the agents were given theleads, but the agents never had
the appointment setting.
They never followed up.
And it was just a lost cause.
They then in turn said wait aminute.
We can do the appointmentsetting.
(43:25):
If they don't go to theappointment, we can parachute in
one of our guys and we'll sellthe business.
So fast forward, the company'sdone a remarkable job and going
throughout the entire funnel,and they really have no content.
It's all about.
But once again, it's in thiscase.
It's all about the digitalmarketing funnel and how to get
that lead and generate the leadand close that lead.
(43:46):
And that's what companies arelooking for.
And to the extent you can dothat, you get rewarded.
I can't help myself, but saythat my family business, which
was started in 1898 and was acompilation of, I think, at the
end in the print side, 38volumes of some kind sold to
Xometry in 2021.
And it was an advertisingbusiness, Thomasnet.
(44:08):
For, 300Million dollars thething with the advertising part
of this discussion, it is true.
It is the kind of environment ishighly digital.
There is a huge amount of firstparty data involved with the
searching and evaluation ofproducts.
There is a larger story there,but I agree that it's, not all
advertising is the same.
But the last point I'll make is.
(44:29):
If that's what buyers are sayingthey want, it's perceptions
reality, so it's good todiversify.
So we're we've got about fiveminutes left, and I wanted to
see if there's any questions orthoughts from, those of you been
listening, an opportunity toweigh in on anything we've been
talking about.
I'd like to ask Reed a questiongiven that, the M& A market's
(44:53):
been very soft over the last 18,almost 24 months interest rates
of cost of capital is muchhigher.
And but what's your outlook for2024 in terms of B2B?
And we've talked about thedifferent business models.
But what's your overall outlookand we're starting to see the
debt markets improvesignificantly more confidence
(45:16):
from that standpoint but a lotof vertical markets have been
had a very choppy year in 2023.
But what's your outlook, Reed?
Yeah, first I'll just say, Ithink your timing is exactly
right in terms of the last 18months because we started to see
a fall off about mid 2022 andthat's continued through all of
(45:38):
this year.
It's been hard to get, buyersand sellers together on
valuation.
It's been a big struggle.
The buyers are definitely moreconservative than they've been.
And sellers are still lookingfor prices that other sellers
were getting in 2021 that arejust not there today.
(45:58):
But I do think I'm veryoptimistic about 2024.
We feel we have a lot of dealsare going to close in the first
half of 2024.
And it feels like it feels likethere's more.
Impetus to get deals done thanthere has been.
I think there are sellers thataren't going to just hold out
(46:21):
for, exactly what they want, butare going to be more willing to
compromise.
And that is required in Thecurrent deal environment.
And as you said, I think I thinkto some degree, I've always
found that the deal marketfollows the stock market.
And it used to be, there used tobe a lag, but now it's more
immediate.
And so with the stock marketkind of resurging up until the
(46:43):
last three or four days that.
Makes buyers, more optimisticthat they can, they can put
money to work and they're notbuying at the wrong time.
So that's why I think you'reabsolutely right.
We're very bullish on 2024 rightnow.
There's a huge amount of drypowder among private equity
firms that have committed fundsand haven't been able to put the
(47:06):
money to work upwards of 2trillion.
And also on the private debtmarkets on these debt funds,
they've raised funds and thoseguys have to put the money to
work as well.
So I think you're right.
I think 2024 should be a turningpoint.
Paul, you have a question?
Yeah, it's more of a comment.
(47:26):
I've spent my whole career inLatin America and here, I
certainly know, and I've worked,I've been on the company I work
for has been acquired twice.
And I know that overall, ingeneral, in Latin America, our
quality of data and thewholeunknown.
Data that we have is much lessthan what is the case for, U.
(47:48):
S.
companies.
I just wanted to hear anyopinions of, what people think
of that when it is a bigmultinational that has such a
mixed bag of products around theworld where, it's just very
obvious that some places thedata is not going to be in the
same shape that, it is with a U.
S.
or Canadian company.
(48:10):
Yeah.
Oh, go ahead.
I was just gonna say I think itdepends if buyers are gonna
focus.
We're doing a deal right now andwe just did another one recently
where most of the revenue was inthe us but we've had revenue and
the UK and Australia, and thebuyers really they'll, in
diligence, they're going to lookat everything, but they're
(48:30):
really going to be focused moreon the U.
S.
or where the heavierconcentration of revenue is.
If the heavy concentration isn'tLatin America that's where the
focus is going to be.
And I think it's gonna be it'llbe a little bit more challenging
if you're trying to sell to a USbuyer, I imagine.
Any other thoughts, feedback,comments, questions before we
(48:50):
close out really quickly?
I, you mentioned Heather aboutas by the environment.
I still think it really comesdown to the quality of the
asset.
Yes the mark, the markets play arole in it, but for my
experience has been ourexperience has been whether it's
in the software technologycompanies that we're working
with or media companies.
At the end of the day, it reallycomes down to the quality asset.
(49:12):
If they can pass, quality ofearnings, how well, how good
their shop is, what kind ofshape it's in.
Once you start going sideways onthat, you can never catch up.
It just affects the multiple,the, the valuation.
And so to the extent thatsomeone has their, I'll call it
their act together before goingto market, they're going to get
rewarded.
They have a great managementteam.
At the end of the day, we'restill people at five o'clock go
(49:34):
on, now they're working fromhome.
So we never know, but, but atthe end of the day it's still a
people business.
Yes.
It's driven by data, qualitativeor quantitative.
Yes.
It's but.
Once again, it gets down to realrevenue, real cashflow, and
great people.
And that's a great, and that'sthe mix.
And to the extent that we canstory, tell that you get
(49:54):
rewarded.
Agree.
Data's the fuel.
That's how I like to thank youeveryone.
Appreciate it.
And we'll be, thank you Heather.
Yeah, thank you Heather, fororganizing this.
Thanks.
Thanks, Heather.
I just want to know, Tom Kemp,what bird is it behind you?
Did you have?
What's that?
What kind of bird is that?
Are you the bird?
(50:14):
Oh, sorry.
I am.
Sorry.
I am the one with the bird.
Let's see.
Can you flip the screen around?
It's over in the corner, but I'min Mill Valley, California,
surrounded by redwood trees.
That's beautiful.
Tom, I thought that was theeagle from Eagle Tree.
Carrie, great to see you.
(50:36):
Likewise, thanks, guys.
Bye, everybody.
It's Daniel.
Heather Holst-Knudsen (50:39):
You can find us@2klabs.com.
Thank you.
Thank you for listening to TheRevenue Room by H2K Labs.
Subscribe to our channel today.
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