Media investment banker revisits his "dire predictions".

In our 2004 year-end wrap-up issue (NL/NL 12/31/04), Mark Young questioned a recovery that faced "massive macroeconomic headwinds," including a "further spike in oil prices" and artificially bloated media property prices.

Mark, a member of our advisory board, at the time also commented on newsletter M & A activity: "There are a number of transactions nearing completion right now that don't make sense--at least to us. Buyers are overpaying for companies that don't fit with what they already have in terms of either content or media, and they're doing so with high levels of financial leverage. Good for the sellers. Bad for the buyers."

Mark checked in with us this week and said with mild sarcasm, "Thanks again for highlighting my negative outlook on the market for newsletters on the cover of NL/NL a couple of years ago. My dire predictions have yet to come to pass, although the conditions that I was concerned about then--e.g., inflated purchase prices and leverage multiples--have only worsened since then. Purchase price multiples and leverage multiples have overshot historical norms by greater margins than at any other time in my experience.

"These are still cyclical businesses. There will be a reversion to the mean. In the not-too-distant future, the play in media is going to be on the distressed side. That's my take, anyway," Mark said.

Doing well on his own

Mark Young left Citizens Bank in Boston at the end of last year and is now working independently as a media investment banker. Mark now reports, "Since then, I've been working on a number of formal engagements with publishing companies. Essentially, I've been finding financing for them--taking advantage of the fact that it's currently a borrower's and a seller's market.

"The first two of my engagements, neither one of which involved a newsletter publishing company, closed on June 6 and June 9, respectively. I helped CSP Information Group raise the debt capital it needed to repurchase the equity interests of two substantial minority investors in that company.

"I also helped Contexo Media raise the debt capital it needed to consummate its acquisition of Medical Management Institute.

"In addition to the sale of a horse-related directory, I'm currently working on five more financing engagements: three involving acquisitions and two involving recapitalizations.

"Both of my first two clients are now repeat clients. In fact, the CEO of my first client just asked me to go on his board," Mark said.

Mark Young, 1 Gristmill Lane, Natick, MA 01760, 508-720-0302, cell 508-397-9815, [e-mail]