RSS ’22: “Get the right price” — Top takeaways from Summit M&A session

Another day, another rumored major acquisition. This time, it’s speculation about an acquisition of Roku from global streaming behemoth Netflix that is making the rounds. Merger and acquisition activity has ...
June 7, 2022

Another day, another rumored major acquisition. This time, it’s speculation about an acquisition of Roku from global streaming behemoth Netflix that is making the rounds. Merger and acquisition activity has not just continued at pace in the midst of a chaotic few years — it has accelerated, with bigger targets and massive, media-shaping deals as part of the picture.

Taking place on the first full day of the 2022 Realscreen Summit, “Trendwatch: What’s Next in M&A” explored the ins and outs of mergers, acquisitions and start-up funding in the unscripted space.

Sitting in on the panel were representatives from production companies of varying sizes — James Burstall, chairman & CEO of Argonon (pictured second from left); Samuel Kissous, president of Pernel Media (pictured second from right); and Grant Mansfield, founder and CEO of Plimsoll Productions (pictured right) — and representing the side of the finance world was Richard Gray, managing director of ACF Investment Bank (pictured center).

The panel was moderated by Woodcut Media CEO Kate Beal (pictured left), who led the execs through a conversation that looked at mergers and acquisitions from both sides of the equation. Here are some of the takeaways from the discussion.

Consider your needs

ACF Investment Bank’s Gray advised companies just getting off the ground to consider their needs and what they’re looking to achieve when seeking early funding, rather than simply chasing a cash infusion.

“We see two separate types of companies in this space,” he said. “Some of them have taken on investment right from the outset, and it’s sort of for working-capital purposes often, because networks do take so long to pay and there are cash-flow pressures, and that can be very helpful.

“There are other production companies that, when they set up, they ‘bootstrap’ it, and those are the ones that have a CEO at the top that’s got some passion and drive, and they believe that they can get there by themselves and they work hard to do it,” Gray continued. “Both are equally valid routes.”

Plimsoll’s Mansfield told the audience that when he founded the company, he made a conscious effort to bring people on board as soon as possible.

“I just knew I didn’t want to be that guy in my kitchen trying to do it all on my own from day one,” he said. “I did take an investor on board from day one, which meant that I was able to hire some really good executive producers, so I wasn’t the only guy [at the company] running around trying to get work.”

But there can also be pitfalls with staffing up a fledgling company, as Mansfield explained wryly.

“It turned out to be the right strategy, but frankly, for quite a long time it seemed quite alarming… There was one day when I realized, sort of a month after we started, that I literally didn’t have anything else to do, so I just sort of sat at my keyboard and pretended to type for about 20 minutes, which was a slightly concerning moment,” he said, eliciting laughs from the audience. “The good news is that you’ve got people there to help you.”

Skin in the game

The panel agreed that it’s crucial to ensure key players in a deal have a real stake in the process.

“It’s not just about making money, it’s about sensing that you own a piece of this thing that you’re trying to build, and I think that’s very powerful in terms of creating an esprit de corps,” Mansfield explained.

That sentiment was echoed by Argonon’s Burstall. “What we try to do at Argonon is make sure that everybody who comes in, whether it’s through acquisition or joint venture, there’s a real sense that these people are part of the management team, that we’re collectively in it together,” he said.

Don’t fear all VC investment

Some on the panel advised that working with financiers and venture capitalists can be a positive experience, despite what some may assume. Pernel Media’s Kissous described his own experience working with VC, adding that many of the assumptions that others in his field have made were, in his experience, incorrect.

“The very big difference is, if you take funding from purely financial companies, what they want is a bit like what you buy when you [invest in] the stock market. They take shares and they want the investment to add value over time, so it’s a purely financial [relationship] from their standpoint,” he said.

“But people would always tell me, ‘Oh, you’re working with evil guys, the finance [people] and the VCs and the vultures,’ and [they would ask] ‘How hard is it? Are you suffering a lot?’ And I’m like, no, they’re actually pretty nice. Surprisingly, they were super-nice. Obviously, when you run a production company you have highs and lows… and interestingly, they were very supportive even during the lows.”

Details are crucial

Burstall warned that while many companies looking to be acquired focus on getting as high a price as possible, they should be careful to not let themselves be overvalued, which can often cause problems further down the line.

“I think it’s absolutely critical for sellers to sell at the right price and not sell at an inflated price, because you can really set yourself up for failure. There’s nothing worse than saying to your future business partners, ‘I’m worth this and I’m great and I’m going to bank X millions, whatever it might be, and then underdeliver. I have colleagues and peers that have done that, and it is deeply depressing for everybody,” he said.

“So I really encourage everybody to get the right price. Don’t oversell, because then you’ll just be in hell for the next five years.”

A business built on relationships

Argonon’s Burstall, who has made some acquisitions in his time, gave his perspective on the process, emphasizing that it’s based largely in relationships.

“It’s a people business,” he said. “Life is short and it’s a small industry, and there’s no point in pairing with a team of people you don’t get on with. So there has to be a lot of mutual respect, and we absolutely only ever work with people we get on with and where we respect what they do… For me, at the absolute heart of it are the people. You’re going to be living and working with those people.”

About The Author
Andrew Jeffrey joined Realscreen in 2021 as its news editor. Here, he helps to oversee assignment, reporting and editing for Realscreen's daily newsletter. Prior to his work covering documentary and non-fiction film and TV, he worked as a reporter and associate producer for CBC Edmonton, and as a reporter for The Star Calgary, where he covered daily news on beats such as local and provincial politics, health care and harm reduction, sports and education. His work has appeared in other Canadian news outlets such as TVO, the Edmonton Journal and Avenue Magazine.