The Great Recession has hit the UK startup scene especially hard. Funding has all but dried up for startups and just a few short months ago Jonathan Kestenbaum, CEO of the National Endowment for Science, Technology, and the Arts said that many startups faced an “unimaginable dilemma” in trying to survive.
But are things looking up for UK companies, especially those in the media sector? According to accounting and business advisory firm Grant Thornton UK LLP, the answer may be yes.
It surveyed more than 100 private equity executives as part of its quarterly Private Equity Barometer. 15% “ranked media and communications among the top three sectors they anticipated
being most active in over the next 12 months“. For comparison, none of the executives surveyed identified the sector as one they were active in over the past 12 months.
Grant Thornton says the media and communications sector had the third highest average price to earnings (PE) ratio over the past 12 months, and is expected to have the fourth highest average PE ratio over the next 12. According to Mark Henshaw, who heads up Grant Thornton’s Media and Entertainment group:
There is a sense of confidence that media and communications businesses are
beginning to bounce-back from the market downturn and may therefore increasingly
attract the attention of private equity, particularly in the fragmented digital
marketing sector. It is also reassuring to see that the sector has one of the
highest actual and expected P/E ratios. This can only add to optimistic signs of
an upturn in the industry.
If there is an upturn, it will be certainly be welcome news for a lot of people. Both startups and established companies often rely on private equity backing. As such, if the spigots open and money starts flowing again, it will be interesting to see where exactly it flows.
Photo credit: Orin Zebest via Flickr.