KEY POINTS:
- Mergers and acquisitions (M&A) activity in trade book publishing has accelerated over the last two years, a trend that is expected to continue post-pandemic.
- M&A activity in trade publishing is modulated by selectivity among acquirers — even among the largest publishers — and a relative dearth of financial sponsor participation in the midmarket.
- In a low-growth publishing environment and in an industry that increasingly rewards scale, M&A activity is a useful growth strategy for publishers and a plausible exit strategy for owners of independent publishers.
Mergers and acquisitions (M&A) activity involving book publishers is an ingrained feature of the U.S. commercial publishing landscape. Over the last six years, from the beginning of 2014 through the end of 2019, there were 120 control transactions involving U.S. trade publishers of all sizes: twenty transactions annually on average. This activity has proceeded subject to random variation uncorrelated to industry performance or to macroeconomic factors. In the last 2 years, activity has accelerated, with 27 completed transactions in 2019.
For the last 20 years, trade book publishing has been a minimal-growth industry, and whatever the transient effects of the pandemic, this is unlikely to change for the better over the next decade. A corollary of this forecast, particularly given pervasive risks going forward, is that waiting years for an exit may not be prudent even for those publishers that come through the crisis in a healthy way. Conversely, it is incumbent upon larger players to grow via acquisition if they wish to outperform. Accordingly, we anticipate that the recent high level of M&A activity in U.S. trade book publishing will persist.
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