Live from Catalog on the Road: Time to Make a Deal?

Cambridge, MA–If you’re looking to sell your multichannel marketing business, you may be in luck. According to Michael Petsky, CEO of New York-based investment bank Petsky-Prunier, dozens of private equity groups are actively seeking to acquire multichannel merchants. “Strategic buyers are becoming more aggressive,” he said. Catalogers that want to get in on the game need to bolster their sales, add customers to their house files, and include new products to their merchandise offering.

In his keynote presentation for the DMA’s Catalog on the Road event, “Building Shareholder Value–Leveraging Multichannel Opportunities and Minimizing Risks,” Petsky pointed out that the past few years have been slow for private equity groups; as a result, now they need to place their money. He said there is significant interest in companies with EBITDA of $5 million or more, and even more interest in firms with EBITDA of more than $10 million. Petsky also noted that fewer than 5% of all catalogs exceed $100 million in revenue.

How can companies become a more attractive investment or acquisition target? By focusing on core competencies, Petsky said, including developing new products and services, mastering new channels, and achieving front-end and back-end integration. Specific strategies may include private-label and/or proprietary products, wholesaling, and syndication.

Petsky also said marketers should not be afraid to outsource their call center services or fulfillment if it makes sense, which would enable them to focus more on the front end. Drop-shipping is another option for marketers considering a new venture or product category, Petsky added. “You don’t have to ‘own’ the inventory.”