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Monday, June 14, 2010

Architect of EMAP and Incisive deals pays the price

The departure of Stephen Grabiner from APAX is hardly a surprise. Bright, able and very ambitious, notwithstanding when your job is to make money from media investments and you lose most of it the axe is bound to fall. Apax bought both Incisive Media and EMAP (the latter in partnership with GMG). Both businesses, although horribly damaged by the economy and an overdependence on print, remain profitable but neither have been able to climb the mountain of debt that was used to fund their purchase.

Emap is arguably stronger than Incisive.  It has a much bigger events business, is  the more profitable and although the value of shareholder equity has been largely written off, has not had to give control to the banks.

With Carolyn McCall leaving GMG to join Easyjet, Grabiner exiting APAX there is hardly anyone left who can remember what the rationale for these deals was.  Emap was supposed to be geting a cash injection to fund acquisistions.  With large losses at GMG and no Grabiner at APAX how likely is that to happen?

To grow out of  the problem requires great bravery.  Will we see Emap and Incisive reviewing their assets, closing some and selling others? Or will both businesses struggle manfully under the debt but never really get anywhere.

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