Fireside Chat - Leveraging Data for Enhanced Profits & Valuation

This podcast, hosted by Heather Holst-Knudsen, gathered leaders in the B2B media, events, and information industry to discuss the critical role of data in enhancing business value and navigating mergers and acquisitions. The conversation explored how the importance and use of data have evolved in recent years, particularly in the context of company valuations and M&A activities.

Participants included  Kerry Gumas, CEO @ Metacomet Advisors, Reed Phillips, CEO @ Oaklins DaSilva+Phillips, Mark Zadell, Strategic Finance Executive, Thomas Pecht, Principal @ PMS Inc., and Tom Kemp, Chairman & CEO @ Northstar Travel Group. 

Key points from the discussion:

• Data valuation has become a crucial pillar in M&A due diligence, with buyers now expecting more sophisticated data analytics and metrics.

• There's a shift towards evaluating leading indicators like Customer Acquisition Cost, Net Revenue Retention, and Lifetime Value, beyond traditional lagging metrics.

• The quality and organization of a company's data can significantly impact its attractiveness to buyers and overall valuation.

• Native digital media businesses tend to be more attractive than those with a high percentage of legacy print revenue.

• Performance marketing and first-party data are becoming increasingly valuable, especially with the phasing out of third-party cookies.

• Diversification beyond traditional advertising models is advisable, with a focus on recurring revenue streams.

• The M&A market is expected to improve in 2024, with more willingness from both buyers and sellers to close deals.

• The quality of the asset, including its data infrastructure and management team, remains paramount in determining valuation.

As the industry continues to evolve, businesses that effectively leverage their data, both for internal improvements and external monetization, are likely to see higher valuations and more successful M&A outcomes. The discussion emphasized that while market conditions play a role, the fundamental quality of a company's data infrastructure, revenue models, and management team remains crucial in determining its value and attractiveness to potential buyers or investors.

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About Heather Holst-Knudsen
Heather Holst-Knudsen is the founder and CEO of H2K Labs and Revenue Room™ Connect. A seasoned executive and operator across media, marketplaces, events, and technology, she specializes in digital transformation, data-driven growth, and customer-centric value creation. Heather shares her insights on multisided business models through The Revenue Room™.

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Transcript

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Welcome to the Revenue Room, presented by H2K Labs. Here's your host, Heather Holst-Knudsen. I'll just start off by welcoming everybody to our fireside chat Heather Bolts Knudson, and the CEO and founder of H2K labs. I have a very deep background in B2B media and events and digital information. And my company right now is focused on helping what I call business information organizations improve the way that they do business using data. And part of that is improving valuation. And if they're in the market to either acquire or be acquired or gain investors, how data can play a very significant role. The purpose of the fireside chat is to be highly interactive. So when you are available and able to please put yourself on video. And either raise your hand or comment in the chat, but it's a small group, so we should, not have any issues in terms of either having people participate or ask questions. And I have 2 very illustrious guests as my core panelists. I have Carrie Gumas, who is the CEO of Metacomet Ventures. Many of you actually already know Carrie. But he was the co founder and CEO of Questex, which he sold to Mid Ocean Partners in 2018. And we have Mark Zadel, who is a strategic finance executive and the former CFO of Endeavor Business Media actually as of quite recently. Kerry, you want to do a little brief background? Sure. I guess first of all, it's a pleasure to see everyone. Thanks to Heather. For organizing this session. Most I think I know most of you. But, my background is 40 plus years business media events, information in a wide range of companies from startups to the large read, read global players. And obviously, with the founding of quest X. Middle market, private equity owned media business. When on this particular topic I can say I've had a lot of experience, some of that good, some of that definitely in the bucket of lessons learned and hopefully can help others benefit from some of that experience. Terrific, Mark. Yeah, good morning all. So as Heather said, I was recently the CFO of Endeavor Business Media, which when I joined nearly 2 years ago, I had come from a background where in the investment business, I followed companies like Disney, Time Warner, Viacom, Comcast, and thought I knew media really well. Which I guess I knew one type of media, but B to B taught me it's a completely different animal and I think has different data needs and just different ways to look at the business versus some of those other traditional forms of media. And so I think in one of those is from a data perspective, I think you have to look at it uniquely. And so having had experienced myself in different finance roles and insurance and software and distribution allows me to some degree to take some of those paradigms and apply them in a different environment. And ultimately use the data. To come up with actionable steps and then push that culturally throughout the organization so that the company can function on its own. I enjoy doing that. I've done that with pretty much every company. I've been at including endeavor. And so it's fun to be here with you all to talk about it and to some degree evangelize it. Perfect. Yeah, This is supposed to, as I mentioned, be very interactive. So I thought Reed, do you want to do a quick intro in case there are people on here that don't know you, which I find highly unbelievable, but it would be great to do a quick intro. Yeah, sure. Yeah. Thank you, Heather. I'm Reed Phillips. I'm the co founder of Oakland's to Sylvan Phillips. So we're an investment bank based in New York that focuses on media marketing information and more and more software. We have about 25 full time people, and we also have a number of senior advisors, and we're part of a global group called Oakland. So we have access to, Other investment bankers and 45 countries and collaborate a lot now on international deals. Excellent. Excellent. Thank you Scott, you're from Canada. I believe you want to do a quick intro. Or Heather. Yes, I'm Scott Jameson with Annex Business Media. We are a B2B media company out of Toronto and the rest of southern Ontario. We have 60 B2B media brands and do about 75 live events a year. We still print our own magazines. I know that's a bit of a throwback. We have our own printing press, print our own magazines take it right to the root. And thanks Heather for the invitation. Terrific. Terrific. And Tom Pecht, you're you are one of Mark's guests. Thanks everybody. I know a number of people here. Tom, how are you doing? It's been a while. Great. Great. Good to see you. Great. You too, Tom. So it's all good. So I'm, so about 3 years ago, I formed a new company called TI Partners out of Atlanta. Along with Derek Shawty's former Morgan Lewis. We figured out finally that the best way to get out on the highway is to hire a bunch of smart MBAs from Emory. We've been off and running. We actually do a lot more software technology enabled services. We're in the market right now, for example, with a a company that's in multilingual chat using AI or call centers. So we actually have segued a little bit away from media. Having said that, Earlier this year, we did a deal with Wolters Kluwer and and also sold a an online software community as well to I think it was tech advice up in Nashville. So still in media, not as much more software, but there you go. We love the business and love media. And it's great seeing you guys. I think we're the last man standing here in this field. All of us. Thank you. And Ryan Delahunty. I don't know if you've got here your video on, but I believe you're here. I'm here. Quick intro meeting hopping. Can you hear me? Okay. Good. Good. Ryan Delahunty work with Gardner business media. We're a family owned and operated Discrete part manufacturing media company based in Cincinnati, Ohio. We've got brands all over North America as well as three brands in Mexico. We're in the event business, the digital space, as well as the print media business. So thanks for the invitation. Terrific. Terrific. And then Steven Acunto, I'm gonna pop over to you. Yeah. Good afternoon. Thank you for organizing the group. You always put together a good group. I'm sorry. I was a few minutes behind. Junior. We my father and I put together a holding company four years ago to go out and acquire one of the leading titles in the risk and risk management and risk and insurance space in the U. S. And then we went out and bought five, four more businesses three of them over zoom in 2020 and 2021. So we've rolled up a bunch of businesses in that space across a numeric geography, North America, EMEA, and South China, Asia. So I oversee operations and development for the group. Terrific. Thank you. Tom, welcome. Nice to see you. Hi, Heather. Thanks for inviting me. And as soon as I saw my good friend, a guy who I have huge respect for, Kerry Gomez, on the program, I had to sign up for this. And so Here carries words of wisdom about data driving value and read it's great to see you Tom. It's great to see you too. Yeah. So I'm Tom Kemp. I'm chairman of North Star Travel Group. I was for 14 years chairman CEO of North Star Travel Group. It's a leading B2B information and events company and serving the global travel industry, which is a great industry to be in. It is a great industry now, but during COVID was hit pretty hard. We're looking at our potential exit relatively. Near term and data and driving data and intent data and all that is a hugely important part of our strategic plan. So thanks. Absolutely. Paul say no more. I'm glad to see you back on. Yeah, took me a minute. But here I am. Hello, everyone. I know, certainly some of you hey, Carrie I have been working at the B2B events business here in Mexico for. 32 years and our company Tarsus, as you see, the logo was just recently acquired by Informa and I will be leaving the company at the end of this year. And and so I'm interested in just talking to you guys and listening to what you have to say. And yeah. Terrific. Terrific. And just my team is on here. Scott Evans is a partner of ours. So Scott, I know, some of these people quick intro and then I'll introduce my team and then we'll kick off. You're on mute. I do know a few of the faces here. It's great to see some guys carry. It's it's a pleasure to be back on with with such an an experienced group of people. The last man standing status also gives you a lot of interesting insights that I'm hoping to benefit from. I started my career in the agency business. I was with Gray Advertising and Madison Avenue for 11 years, and then moved on to a little spinoff called Razorfish, which was the first digital agency. In in the world, believe it or not. And from there I started doing digital innovation work at Razorfish for a bunch of CPG companies, and then made my break into the event space where I I took a job as innovation director for read exhibitions in Norwalk, Connecticut. I worked for Chet Bruchette, if anyone knows that name. And that was an interesting experience. I really. Did not know much about the event space. But that program was a wonderful immersion into the global events business. Did a lot of a lot of work with customers, looking for those hidden sort of insights that could lead to revenue and growth and data. Was a big part of that story. After I left read I joined a company called balloon, which some of you may be familiar with, we're a two sided marketplace where we enhance physical trade shows with a with a product discovery, service discovery marketplace, and recently partnered with Heather and H2K to dive deeper into what I think is one of the biggest challenges facing the event and media business, which is. Which is the data side of things and and bringing an industry that may be lagging a bit in that area up to up to speed. Pleasure to join you guys and I'm looking forward to the conversation. Great. That actually is a great way to kick off the conversation and to put some context around data. What do we mean by data? Many companies call themselves data driven. I recently spoke about this and I think they're data aware versus being data driven. And I also think there's a lot of confusion about, what does that mean? I recently participate. Took a course MIT offers on data monetization and they have a very good framework called IWS. The I stands for improve. It's how you're using data to improve what you're doing internally. From reporting or predictive analytics or gaining deeper customer understanding. All of those things add cash to the bottom line, or are supposed to. The second part of that framework is the W, and that is actually how you are starting to commercialize data. And that is wrapping your existing product set with enhanced data analytics to either improve your customer retention Increase wallet share create an upsell opportunity, but it's based around what you're currently selling. And it's the next step because you don't have to do any sort of you don't have to do much in terms of organizational change to actually activate that. And the third part is sell. And that is the taking your data and creating a brand new monetizable product that you are going out and selling as a subscription that actually does require huge amounts of change. In the business which is why it's last and really that framework, they're all intertwined. You cannot do w without the I w s. And all of that leads to how you go to market as a business. Whether you're, you're acquiring companies or you would like to be acquired or you're seeking investment. So that is how we will be approaching data within the context of this discussion. I'm going to kick off with our 1st question. And I'm going to throw this out to carry 1st, which is how to integrate data valuation into your overall strategy when assisting or engaging in a merger and acquisition. Activity and have metrics changed, from when you sold quest X in 2018. And what you're seeing now are investors. Also expecting and asking for different types of metrics than they were before. Yeah, thanks, Heather. That's that's a great way to start the conversation off and I think. Everybody that's probably on this zoom can relate either as a buyer or a seller, an intermediary. Thanks that, the process of valuing and either buying or selling a business is extremely data intensive, in and of itself. The process, is data intensive. And I think over time, certainly, 1 of the things that you see is that I W. S. Model that you reference. I tend to think about it is. Performance related data on the one hand, and product or productize, data on the other. That's either being used for UX to improve customer experience or strictly, to monetize and commercialize as you go through and you evaluate businesses. One of your first impressions that's generated in the context of an M and a transaction, is the performance related data, right? It's the accounting. It's the business metrics around that. And, certainly I can think of many different situations where, you know, that first impression either attracted you even more or attracted you less. Because of the quality of the data and the information, right? When you ultimately get to, the productized, data definitely there's been a change, and a lot of that obviously has to do with the business model, right? The underlying business models moving from, analog to The digital business models certainly pushes you to evaluate and look at the data a little bit more carefully. You know what I would say, and maybe I wouldn't put this in a 5 year time frame, but let's say 10. Is that if you're if you were either preparing a company, for sale and preparing it, preparing its data room and preparing it for due diligence and manager presentations, what have you. Or on the other side on the buy side, if you were getting ready to conduct an evaluation. 10, 10 years ago, you might have stopped your data assessment, at a numbers oriented evaluation, right? Nu numbers of attendees, numbers of subscribers, various, metrics around that. The validity of, the company's representation of what was actually in the database, right? And maybe you had a a further technology assessment that leans more towards the the technology platforms, that the company was using. But I think that flash forward to where we are today. And I think this is an entire pillar of whether it's due diligence that's being conducted on the buyer side or, preparation, by companies that are that are operating their businesses and considering an exit. There's an entire pillar of data valuation and the process and around that, that increasingly is a critical driver, of the attractiveness, of the particular asset and ultimately, the valuation. And there are they, There are some very specific methodologies that are brought to that process. And I think I'd defer here to, maybe, read and Tom it is guys that are helping companies on both sides of the buyer, seller line, but that data valuation is really a really critical part of it. The due diligence, the evaluation process, and the last thing I'll say there is that that you have to remember as a seller, you're running a business, right? You're, you built it, you're running it you're doing all the things that you need to do to be successful, you're monetizing, or in some cases, not monetizing but each buyer that's out there, has their own perception of what is valuable in your business, And they also have their own business model, their own methodology, for how they go about conducting business and with regard to data, monetizing that, right? So part of the art of, getting the company, positioned and driving, the greatest value for it, I think, in the M& A transaction. Is really understanding and being able to communicate to those very different, buyer perspectives, given different businesses are looking for, for different things to be added into their business and they may value it a little bit differently. And it's why I place a pretty heavy emphasis on a really thorough data data valuation leg basically of the the the process for, preparing a business, for exit. That's really interesting. The things, the data points you were talking about earlier, like attendees and subscriber, all of those are what I call today and yesterday numbers, so lagging theaters what I've been hearing and actually Tom and read. I actually, I'm going to call on you and Mark on this 1 is. Cost of CAC, right? Customer Acquisition Costs Net Revenue Retention Lifetime Value, and not just on, the advertiser or sponsor or exhibitor side, but on the audience side. And Expansion. These are what I call health. Indicators, and it's a huge struggle. And Mark, I'll call on you first, just because I know you and I've been talking about this for a while, but, what's your experience with this? Yeah. So some of the uniqueness around B2B is a few things. One is you have two customers, right? You have advertisers and you have audience and you have to keep them in sync through B2B. The glue of that, which is the content and so while content is not easy to measure it is somewhat measurable in terms of what you're putting out there. And I think being able to at least track or understand, is it short form long form. Evergreen, is it strategic somehow bucket ties it in a way that you understand how you're approaching the market and know what's holding together essentially your revenues in line with your audience the other as you address the whole lifetime value. Concern with audience, it's it's an exhaustible asset, right? Every audience member is the values going to erode over time as you continue to use them. And I don't mean that in a pejorative way, because it could be helpful to them too, but over time, there's a sort of a depreciable element to that. And Tom, you're preparing for an event with Northstar in, and you've been through this rodeo many times. Is it different now? And are you being asked to put together data that I, that we just described in terms of these, the leading indicators, the health of the business versus the normal stuff? Yeah, I think it's changed dramatically over the last few years. And I think the acceleration through COVID, particularly its impact on what had been particularly event driven companies carry with all of his experience. Noses is it's changed dramatically in that. And North Star has always been a omni channel company, marketing company that connects buyers and sellers through all different channels, through content, through software, through through our face to face events our digital media products. But more and more importantly, as we go forward is first party data. You have your top of the funnel. You bring in bring in your users and audience through the top of the funnel and bring'em through the bottom of the funnel and converting them to to known users and then to behavioral data and then intent data. And I think the a big trend and the more we can. Focus on performance marketing lower in the funnel. So you can draw the parallels between spending money on promotion and advertising and sponsorship and connecting that with a sale and performance. And so a lot of what we're doing now is focused on building that first party data building. understanding behaviors of that first party and then intent data and connecting that to a transaction. And so it's become much more important. I think as we go forward for a period of time, as Kerry Weld knows, a lot of buyers and investors were looking at, in some cases in B2B, primarily event driven companies. And now they're looking for omnichannel companies that can monetize their audiences in the relationship with sponsors and advertisers in a much more full way. And I think it has changed dramatically but particularly with cookies going away that first party data, as well as the context. Of the content that you have and the closer alignment you have between your your content and the environment in which people are promoting their products and the context and the content of that is much more important. Thank you. No, absolutely. And read, you're heavily involved, obviously in, in putting together buyers of with acquirers. And this must be something on both sides of either doing it really well and they get it or not. What's your perspective? Yeah, as everyone else has said, and I agree completely. The process of, buying and selling companies is much more rigorous when it comes to due diligence. For example, one of the big changes. Is that almost every buyer that we're encountering requires a quality of earnings before they'll close on the transaction. A lot of times the sellers will try to preempt that and do their own quality of earnings. But that's an example of just. A lot more data, a lot more, rigorous examination of each business before they're acquired. And then when we're involved in software companies, there are just a lot of statistics and things that buyers are going to expect and that's starting to. flow into B2B deals as B2B media companies get more complex and, as they're doing more with data. I put the hierarchy in terms of value at data and information is the highest value that you can when you're attributing value to a B to B media company, events and subscriptions come next. Not all B to B companies have subscriptions. And then after that, it's advertising driven businesses. We found really I would say, since since Covid, we found, Less and less interest in advertising driven businesses become a more of a struggle to move those companies. So if you have an advertising driven business, I would strongly recommend that you add on, as Tom was saying, events and data and just be a multi channel business that's going to be of much greater interest to acquirers. And and there are just some really impressive examples now of B to B media companies that are using data in really interesting ways and monetizing it. And creating a lot of value for their companies. Randall Riley's a very good example of that. Oh, yeah. They've been doing great. By the way. Congratulations. The Taunton Press and Active Interest Media team. That was big. Thank you. Thanks, Tom. Thanks very much. So any questions on this topic before I go to the next question? All right. Actually, I was going to ask something about due diligence, but I think I want to go to One that I'm going to go to the value real, the value realization question because I've actually heard this issue too. And that is one of the biggest investment thesis is when you, when I, when a media company or an event company is buying another one or private equity business is going out and saying, I want to add to my portfolio is that you plus two equals 10. That there is a convergence going that's going to happen on audience on advertisers and sellers and data and then the acquisition takes place and then you have this. Oh, wow that's not happening the way we wanted to the data's in the way and, there's a lot of either delay or. Sometimes failed acquisitions. Carrie, you were recently talk about without naming names your experience with this. Yeah that's that's a good one. I can probably give, that sort of a half dozen, examples of of the great, the great stories. I want to think of something that's a little bit more, more, more recent, right? And I've got to be careful about naming names, but let's say that you've got a business that's profiled that's financially, got very attractive characteristics, right? It's somewhere, for as an add on business in particular to put it in those terms, right? Growing at double digit, rates with, 30%, EBITDA margin, right? On a relatively large, 10 15 million revenue base, right? So just from the from that, profile alone, you know that you're going to get, a certain level of interest, right? Because it's got, some financial characteristics that are going to be attractive. And, if it's in the right vertical that that a buyer has prioritized, you're going to get, very strong interest. The difference between, a company that it has really thought about, data as a strategic asset and a driver, of enterprise value. And has made the investment, in in its data in its capabilities and its platform. Let's say the difference between, having done that and let's say a company that's taking a more legacy organic approach. The difference there is really starts with a very binary decision, right? Buyers and I've experienced this personally, right? Where company a that I described, attracts A lot of buyers, a lot of buyer interest, particularly in the 1st round company B gets that initial interest, but very quickly there is a fall off because it just doesn't show. Because the right the data house. Is not in good order. Taking it another step further. And really driving a premium, valuation of premium above average, premium multiple, right? Part of that is We I think we all know, like part of this timing related, right? We're hitting the market at the right time, with the right asset. And you've got, enough enough buyer activity, but. On that initial impression, right? There is the next, level of can that company, stand the test, of due diligence on a very rigorous due diligence process. And the thing that I thought that was interesting about the comments that Mark made Mark, Tom and read is that we're seeing a lot of software, evaluation methods. And metrics. Coming into the evaluation process, you know of b2b, right the more digital our businesses are The more digital platforms are fundamentally about business you know the more we're hearing, mrr ar clv cla I could go on with the alphabet soup right of metrics and analytical tools that are being applied right? But these are in many ways like they're coming from analytical processes that have been used to evaluate data and information and software businesses, for a really long time now. We're, we're seeing them in B to B. So if you don't really understand what those analytics are, what they're all about and the business isn't really there for, ready to come under that type of evaluation, that type of scrutiny. Let alone whether it's performing right at a right level. But, if you're not ready for that type of analysis. You're going to diminish the value ultimately, the return to the shareholders because the business may simply, get a turn of a, complete, full multiple or maybe even to less value, versus the company that is prepared that does have the data that can show it. They can demonstrate it over time. It can stand up to the bevy of, accountants and technical advisors and what have you, that are going to be in under the hood, right? So I think that's the way that I would, frame it. Yeah, I actually, this is the really tragic part about it. It's always frustrated me with media and events companies is that the data is there. It is absolutely there. And actually, it is plentiful and very rich. But because of lockages in terms of getting that view and, it is prevent you could be losing value simply because you don't have the right data stack in place. And Mark, I'm going to throw this over to you. And you're not just a CFO, you are a value creator. And what's your advice? Yeah, so there's a foundational piece to this, which you were alluding to. If you have the data, you should be leveraging it. And it should when you provide it through the data room, it has to tie in with whatever story you're telling. And you have to know that before you present it to a potential buyer if you're on the sell side. But I think there's, I think there's a couple other pieces which could have a very heavy influence on value that are aren't often used, especially at the smaller end of transactions. But as you start to get into the 50, 100, 200 million range really should be table stakes. And one of those is good CRM data. And that CRM data needs to tell you what are the activities of the Salesforce, by person, what kind of disposal rates do they have? What kind of win loss rates do they have? What's the underlying activity driving the sales? And one of my favorites is always have it is to make sure you have a paradigm or understanding around. Where are you actively selling versus where is someone taking orders and to at least know how to manage match that value prop with a cost so that you understand if it's order taking that's at a minimal cost if it's creating value through an active sales process, there can be a heavier investment on that and customer acquisition costs could be higher because you'd expect a bigger benefit. And then the other area, which. Okay. I think is probably not table stakes now, but is becoming so is just buyer intent and having a just a deep understanding of what's happening to your audience and their journey and being able to use that to leverage a discussion with customers around R. O. I. So that the company is maximizing its revenue and pricing. Right and Tom, I don't know if you want to weigh in on this. I think it's pretty interesting that you used to, or you still have engaged, but you're, you were very focused on media. And now you've moved into more of the technology and information type businesses. Is that correct? And with that, if, a media business were to come to you today and say, Hey, Tom, help us out. No, like seeing the difference between the two sides what advice would you give? My first advice would be if I knew the potential client, I said we should have went to market 10 years ago. Because what you think you have now is not worth the price of the Queen Mary. That's just being brutally, if they're an advertising driven firm. I hate to be brutally honest about it, but that's an ongoing issue that that we'll have. If you haven't made the, I call it the leap across the digital divide, you're going to not get the outcome you expect. And we've seen that time and time again. Everybody in this in this conference call. I've seen that and it's no surprise where I were. Interestingly enough here. We've been talking about quantitative data recently. I've seen on the radar screen. Now, in terms is qualitative data. And measuring that it can be measured. And, what really, my qualitative data is observational data, are we conducting is a way to capture through interviews or focus groups or even questionnaires buyer intent. So there's obviously there's. Quantitative data, but it's a qualitative data has now learned to mix and strange and interesting enough. We're seeing that even in software companies that we're selling is that how are you measuring to Mark's just recent point about that CRM data? There's more to it than just what's driving sales, and that actually qualitative data. That's what we that's gives the having that gives an extra to lift another turn, so to speak, on that multiple at the end of the day. But to go back to the original question, if someone comes to me today, the first area I'm going to go to is everybody else is which, show me your series from your sales pipeline. Show me wins and losses. I want to really get this into the bowels of the business and see how it's operating. And I also want to understand about the content you're producing. Content still drives intent, so we can't miss that. And is that your content? Do you form that out to people? Show me that, and then I can craft the story. And it's all about the storytelling. We, together here, everybody in this, on this call, are great storytellers, or else we wouldn't be in media. So to the extent that we can tell the story, the more, the more interested buyers we're going to have. That's really interesting and I just drew this or this 4 big points that I think have been made during this call is. 1 is having your data story and house in order and make sure you're telling the right story ahead of time. The 2nd is you need to have the right qualitative data. Those leading or revenue health indicators. And you're adding in the qualitative data, which is my data. So good, whether it's my content or my CRM that I actually can see and identify. Trends that are happening or, opportunities. And it's not just close one or close loss rates. It's, maybe customer segment growth that, in areas we didn't anticipate. And then the last one really is is data products. The real true data monetization that you are. You're taking this incredible asset that you have, and you are creating a product that can be, moved into a, a repetitive revenue stream, but it's helping you diversify away from advertising. Those are the four points I've taken away so far. And I actually thought your last point that you said CRM and content, you'd actually didn't bring up audience. Yeah, actually, I just want to push a little bit on that point, though, right? About advertising businesses, because not all advertising businesses are the same, right? So and in B to B media, right? We let's we can look at a few reference transactions. So I probably can't talk about the ones that maybe came to market and didn't successfully consummate. But there are, there are certainly a number of those out there. That I would imagine some of the folks here, or aware of. But take a business like industry dot, for example native digital B to B media, definitely ad driven. And clearly there, the value that was perceived, by the market generally, and ultimately, by informative audit it was pretty significant. I think that and I could probably, ask, the group here as well. For other examples of native digital, businesses like that B to B digital media businesses. I think the problem with the ad driven businesses and we're we should talk about that directly. Is that. Native digital media, business that is advertising driven, but it's still, it's generating data and there's ways to monetize that data, et cetera, et cetera versus, let's say a comparable company who has a higher percentage or much higher percentage of, traditional print, that's where you really get that disconnect, I think, in an evaluation process, I think you find that the native digital media products are more. Attractive kind of generically, then, the legacy. And that's without talking about whether or not there is a subscription data revenue stream or anything that's, paid content, anything of that nature, just purely, ad driven B to B business model a versus ad driven, Model B. So that I think that's a fundamental reality, right? And so if you are, in a situation where you have a lot of that legacy and look, I personally have been in that, right? I, when I started quest x brought it out, from advanced star. We were 70 percent of our business was print magazines. We were. Actually, Tom I think I remember, I got like the chump award, if you will, from member of BIMS that used to measure everything in the B2B world, but we were ranked, number two in terms of print volume, paper volume after Penton. So we had a massive challenge, right? And, getting from that starting point, to, ultimately, where we went, where we landed, and frankly, where, Quest X is today and where I hope they land, whatever that next round is. You've got to really drive that because you're, if you are, in, a business that's got a lot of that legacy print in it, you've got to find a way to ultimately enhance the overall value of the enterprise and your digital and your data strategy is a big part of that. And I'd say Tom Kemp. Probably on this call, you've got more experience than I do in that time, but how have you dealt with that at Northstar? Because you've made a tremendous transition there, right? Yeah, I think that Reid's comment, Tom's comment about advertising is a little bit off base because you have to really differentiate what kind of advertising and performance marketing versus display advertising. Certainly in the worst examples, print advertising, which, and when I joined North stars, like you carry 70 percent of our revenue came from print advertising today, it's 8 percent of our revenue. And most of our. growth in digital 32, 33 percent of our total revenue comes from digital products right now. But the growth there is not from display advertising on our websites. It's performance marketing, it's ABM marketing. We've just launched the social influencer program and trying to go down funnel with intent marketing and, but it's still, it's advertising. I mostly Google and medicine. Revenue is advertising based on that. All advertising is bad. It's how you connect that the context of it, and particularly, I think, for B to B companies as we go forward. I think there's a huge advantage that we have with cookies going away. is that our first party data, the combination of our first party data, our trusted brands, and the context. And when Disney is advertising on X next to some hate, hate posts or whatever, anti Semitic posts, that context in which you're advertising and showing up is a huge impact on us. So the more B2B. The more we have valued content, a safe, trusted environment for our advertisers and our sponsors as well as tying that in with first party data and performance marketing, I think we're in a great position and I think it's going to drive value as we go forward. Right, Reid? Yeah, I know. I think so, too. And I think I do think that there are certainly going to be anomalies where there are people creating businesses that are still driven by advertising, like industry dive that Carrie mentioned that did get a very high valuation equivalent to what a lot of subscription businesses get. But, just from what, I'm hearing and I'm sure Tom Peck is hearing as well from buyers. There's just a there's been a big shift, I would say, in the last 3 to 5 years, and everybody wants recurring revenue. And you can get that from software. You can get that from events. I think are a good example of that. You definitely can get that from data and information where it gets trickier is advertising. And that's yeah. Why there's just so much emphasis from buyers. I definitely from private equity buyers, but also in some cases from strategic buyers because they know what is what elements of in their business are really contributing to the overall value. We talk about this performance driven data and Tom has been mentioning about 1st party data earlier this year. The firm sold D zone to as mentioned to technology advice. And D zone was a worldwide. Profession for online community for software developers. And the question that was posed us during the process of due diligence throughout the entire process was that tell us about the sales funnel. So where we found out the recurring theme is if a company is deep into. Don't beyond just providing lead gen, but also involved in sales calls or follow up or the sale itself. There's a big lift in that multiple and that valuation. So it's it. I'm just trying to tag on here. It's the sales funnel and where the company operates going beyond just having someone raised their hand. I think a lot of companies have found out this great raised her hand, but are they actually those leads being followed up? There's a group called in Nashville junk crew. And Mark, you may be familiar with Jump Crew. So Jump Crew is involved in the sales funnel process. What they found out is that they were generating leads for insurance agents and for the insurance companies. But the agents were given the leads, but the agents never had the appointment setting. They never followed up. And it was just a lost cause. They then in turn said wait a minute. We can do the appointment setting. If they don't go to the appointment, we can parachute in one of our guys and we'll sell the business. So fast forward, the company's done a remarkable job and going throughout the entire funnel, and they really have no content. It's all about. But once again, it's in this case. It's all about the digital marketing funnel and how to get that lead and generate the lead and close that lead. And that's what companies are looking for. And to the extent you can do that, you get rewarded. I can't help myself, but say that my family business, which was started in 1898 and was a compilation of, I think, at the end in the print side, 38 volumes of some kind sold to Xometry in 2021. And it was an advertising business, Thomasnet. For, 300Million dollars the thing with the advertising part of this discussion, it is true. It is the kind of environment is highly digital. There is a huge amount of first party data involved with the searching and evaluation of products. There is a larger story there, but I agree that it's, not all advertising is the same. But the last point I'll make is. If that's what buyers are saying they want, it's perceptions reality, so it's good to diversify. So we're we've got about five minutes left, and I wanted to see if there's any questions or thoughts from, those of you been listening, an opportunity to weigh in on anything we've been talking about. I'd like to ask Reed a question given that, the M& A market's been very soft over the last 18, almost 24 months interest rates of cost of capital is much higher. And but what's your outlook for 2024 in terms of B2B? And we've talked about the different business models. But what's your overall outlook and we're starting to see the debt markets improve significantly more confidence from that standpoint but a lot of vertical markets have been had a very choppy year in 2023. But what's your outlook, Reed? Yeah, first I'll just say, I think your timing is exactly right in terms of the last 18 months because we started to see a fall off about mid 2022 and that's continued through all of this year. It's been hard to get, buyers and sellers together on valuation. It's been a big struggle. The buyers are definitely more conservative than they've been. And sellers are still looking for prices that other sellers were getting in 2021 that are just not there today. But I do think I'm very optimistic about 2024. We feel we have a lot of deals are going to close in the first half of 2024. And it feels like it feels like there's more. Impetus to get deals done than there has been. I think there are sellers that aren't going to just hold out for, exactly what they want, but are going to be more willing to compromise. And that is required in The current deal environment. And as you said, I think I think to some degree, I've always found that the deal market follows the stock market. And it used to be, there used to be a lag, but now it's more immediate. And so with the stock market kind of resurging up until the last three or four days that. Makes buyers, more optimistic that they can, they can put money to work and they're not buying at the wrong time. So that's why I think you're absolutely right. We're very bullish on 2024 right now. There's a huge amount of dry powder among private equity firms that have committed funds and haven't been able to put the money to work upwards of 2 trillion. And also on the private debt markets on these debt funds, they've raised funds and those guys have to put the money to work as well. So I think you're right. I think 2024 should be a turning point. Paul, you have a question? Yeah, it's more of a comment. I've spent my whole career in Latin America and here, I certainly know, and I've worked, I've been on the company I work for has been acquired twice. And I know that overall, in general, in Latin America, our quality of data and the wholeunknown. Data that we have is much less than what is the case for, U. S. companies. I just wanted to hear any opinions of, what people think of that when it is a big multinational that has such a mixed bag of products around the world where, it's just very obvious that some places the data is not going to be in the same shape that, it is with a U. S. or Canadian company. Yeah. Oh, go ahead. I was just gonna say I think it depends if buyers are gonna focus. We're doing a deal right now and we just did another one recently where most of the revenue was in the us but we've had revenue and the UK and Australia, and the buyers really they'll, in diligence, they're going to look at everything, but they're really going to be focused more on the U. S. or where the heavier concentration of revenue is. If the heavy concentration isn't Latin America that's where the focus is going to be. And I think it's gonna be it'll be a little bit more challenging if you're trying to sell to a US buyer, I imagine. Any other thoughts, feedback, comments, questions before we close out really quickly? I, you mentioned Heather about as by the environment. I still think it really comes down to the quality of the asset. Yes the mark, the markets play a role in it, but for my experience has been our experience has been whether it's in the software technology companies that we're working with or media companies. At the end of the day, it really comes down to the quality asset. If they can pass, quality of earnings, how well, how good their shop is, what kind of shape it's in. Once you start going sideways on that, you can never catch up. It just affects the multiple, the, the valuation. And so to the extent that someone has their, I'll call it their act together before going to market, they're going to get rewarded. They have a great management team. At the end of the day, we're still people at five o'clock go on, now they're working from home. So we never know, but, but at the end of the day it's still a people business. Yes. It's driven by data, qualitative or quantitative. Yes. It's but. Once again, it gets down to real revenue, real cashflow, and great people. And that's a great, and that's the mix. And to the extent that we can story, tell that you get rewarded. Agree. Data's the fuel. That's how I like to thank you everyone. Appreciate it. And we'll be, thank you Heather. Yeah, thank you Heather, for organizing this. Thanks. Thanks, Heather. I just want to know, Tom Kemp, what bird is it behind you? Did you have? What's that? What kind of bird is that? Are you the bird? Oh, sorry. I am. Sorry. I am the one with the bird. Let's see. Can you flip the screen around? It's over in the corner, but I'm in Mill Valley, California, surrounded by redwood trees. That's beautiful. Tom, I thought that was the eagle from Eagle Tree. Carrie, great to see you. Likewise, thanks, guys. Bye, everybody. It's Daniel.

Heather Holst-Knudsen 50:39

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