For those unfamiliar with W.B. Grimes & Company, based near Washington, D.C., the company has been active in media mergers and acquisitions since 1959, as well as M&As in the sports sector through The Sports Advisory Group.
“We’ve been dealing with broadcast, newspapers, trade publications and have been involved with more than 1,500 media properties sold through the years,” says Grimes. ”In recent years, we have been more and more involved with the digital properties and out-of-home properties associated with these traditional media. But over the last couple years we’ve been watching the growth of the digital out-of-home sector, watching it emerge and reach the point where it would interest potential buyers.
“We see that it has now reached a maturity where it has a track record and can be interesting to private equity investors, venture capitalists, and companies themselves that want to buy – as well as companies who would like to be bought.”
While Grimes admits that private equity investors usually aren’t interested in companies with less than about $20 million in revenue – a point echoing that of Mark Boidman, director of investment banking at Barclays Capital, New York, at the Digital Signage Investor Conference last October – there are only a few DOOH companies that have yet reached that threshold.
“However, VCs like to get into DOOH companies in the early stage and fund initial developments and then will often exit the company after three or five years, or sell it, or, if a company is really successful, may want to take it public.”
Grimes knows a lot about the field, in part from other media negotiations, in part because the company has detailed information on thousands of companies on file, and in part because some multimedia companies that it has worked with hold OOH and DOOH properties.
We asked Grimes more about the operations of W.B. Grimes in general.
“We tend to represent more sellers than buyers but we also have a a large suite of buyers. When a buyer is interested in investing in or outright buying a company, and we want to narrow potential sellers down to one, we usually target a completion of a deal in about six months, but we regularly complete it in four. And in some cases it may take a lot longer.” (We notice on the company web site that there are numerous newspapers and radio stations for sale.)
“We come up with a list of prospects, make contact, go through a call for offers, negotiate (sometimes there’s more than one potential buyer), and then, when one company is chosen, there’s the usual examination of every aspect including due diligence. (Going though the books usually takes between 30 and 60 days.)
“Cash is king. Sometimes there’s financing needed to complete a deal and in this economy, dealing with the banks, eg., may be quite tricky and you have to jump through hoops. You have to know what you can afford, And sometimes the first list of prospects is completely rejected and we have to work with a second or third list.”
While there is no set pattern to making any deal, W.B. Grimes has dealt with ‘all sorts of fires’ so its experience and the huge bank of knowledge data that it has on companies can make the process fairly straightforward. Many of these points are important whether the company is representing a buyer or a seller. Why does the seller want to sell: to gain money for growth or expanion? Are the owners wanting to retire? Is a change of management or management style needed?
These and many other reasons have to be considered. Sometimes W.B. Grimes will recommend that a company doesn’t sell but suggests something different for a company to do. Sometimes the job is to educate, because, eg., a company may not be ready for a sale.
We asked Grimes if companies ever try to cover up financial problems or legal situations if they want to sell their company.
“Yes, but we know enough about what to look for on the financial side so anything like that if found pretty quickly,” he says. “One of our jobs is to evaluate an operation. Sometimes inaccuracies have simply been innocent mistakes. A legal problem might take awhile to surface, but we’ll eventually learn of it.”