(by Tolman Geffs, The Jordan, Edmiston Group)  Interactive M&A in May was relatively quiet, with no major deals and a total of 18 smaller transactions announced. These deals cover online media as well as related services and technology, as tracked by JEGI from public and confidential sources.
As noted last month, video and lead generation are getting a lot of attention. It is hard to find a company in either category that is not for sale, wants to be for sale, or is vigorously asserting it is not for sale (the “I’m not that kind of girl” speech that often precedes a sale by about 6 months.)  Unfortunately this rush to market means that more than a few companies that really should not try to sell yet are running around looking for a silly price.  But some very good trades are getting done
In video, AOL finished its long-discussed acquisition of LightningCast, a publisher-side video ad server.  Similarly, VitalStream bought Eonstreams, another provider of ad insertion into video streams for site owners.  Of course, the publisher side is interesting but the advertiser and agency side is where the money is...
On lead generation, you can’t walk through Ad:Tech without bumping into gum snapping kids spouting off about their affiliate network.  These arbitrage-based business models are not sustainable and will go “poof” in due course (after making a very nice living for the aforementioned gum snappers), so they don’t trade well in M&A.  Lead generation sites that address a deep vertical, own their own traffic, and bring domain expertise on the sector they serve do much better as businesses and as M&A prospects.  In May 20/20 Software, which generates leads for providers of mid-range business software, sold to tech publisher TechTarget, while aQuantive acquired FranchiseGator, a nifty provider of information for prospective franchisors.  JEGI is familiar with both and the prices represented nice multiples of revenue for their owners.
What is not trading is ad networks. You can hear the crickets chirping, from an M&A view, even though many networks are nicely growing and profitable businesses.  In theory, buying an ad network is a great way for a major player to gain critical mass in online advertising without the considerable expense of building or buying content and audience. Several networks have tried to sell, but no takers since the disappointing FastClick IPO.  Burst “went public” on the flaky London Alternative Investment Market, and they didn’t do that because US buyers were beating down their door.  From the viewpoint of buyers, the field is too crowded with small/mid-scale players and dueling flavors - contextual networks, behavioral networks, CPA networks, auction networks, just-plain-aggregation networks, and so forth.  Sites “Daisy Chain” a shifting mix of these ad resellers to handle surplus inventory, and few networks offer systematically better CPMs that can command long-term exclusivity with publishers. As a result, the major strategic players (both interactive and diversified media) are sitting on their hands to let the field consolidate and then buy the winners.  They can afford to wait.
Tolman Geffs is a managing director with The Jordan Edmiston Group (JEGI), a New York-based investment bank founded in 1987 and focused on the media and information industries. Tolman was previously CEO of Internet Broadcasting Systems (IBS), the largest online TV network. You should assume that Tolman and his firm have or will do business with companies mentioned in this column.