A Q&A with Daniel Jinich, Managing Partner of ACON Investments, a Washington DC based international private equity investment firm, who is an investor in print and digital media publisher Impremedia.
Portada: Has the current credit crunch affected valuations of Hispanic companies financed by private equity funds?
Dan Jinich: It has affected valuations in general, although not as much as you would think. I think P.E. funds are willing to accept lower returns in this environment and are still paying high prices and just financing a larger portion of the purchase price with equity.
Portada: Have the opportunities increased/diminished as a result of the current crunch?
Jinich: Opportunities have diminished somewhat because sellers who don’t have to sell are taking a wait and see attitude, but there are also plenty of opportunities with companies that are suffering from some form of distress because they were over-levered during the times of plentiful and cheap credit.
Portada: Where do you see the largest opportunity for private equity investments in Hispanic media/Advertising Services?
Jinich: We’re actually more focused on other industries right now, as the media landscape does not look particularly bright.
Portada: Size of company. Do you think there are enough large sized Hispanic companies that merit an investment from you (I understand your minimum investment is $5 million)?
Jinich: Our minimum investment is $20mm and we do think there are enough opportunities with that kind of scale. It’s simply a function of how you define “Hispanic” companies. Our definition is expansive and never limited to companies that serve this segment of the population exclusively; after all, Hispanics are only 15% of the total U.S. population.
Portada: When do you think you will be exiting from your Impremedia investment? What is the most likely scenario sale to another company, IPO etc?
Jinich: We don’t expect to exit for another 2-3 years. The most likely scenario is a sale to a larger, more diversified media company.
Portada: Is there a “Hispanic” valuation premium (because of the growth of the market). If so how high is it (%)?
Jinich: There’s not a “Hispanic” premium per se, but there is a growth premium (i.e. Companies that grow faster than average for their industries do trade at higher than average multiples). Historically, Hispanic-focused media companies have been able to grow at faster rates than general market media companies, because their audience is growing faster and because they can grow advertising rates faster than average because they’re starting from much lower CPMs. But that’s not necessarily the case across the board and must be looked at on a case by case basis.