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Max on Max —

Max Drachman and his new venture Drachman M&A, Co. —The OOH Moat

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Max on Max
—More on Max Drachman
his new firm, Drachman M&A, Co


by William Board, Publisher, OOH Today

Max Drachman former Kalil & Co., Inc. VP, announced the formation of his own Merger and Acquisitions shop appropriately named, Drachman M&A Co. Drachman says he will focus on Mergers and Acquisitions within the Out of Home and Digital Infrastructure sectors. Founder and CEO Max Drachman, launched with nationwide expertise in acquisition and divestiture advisory services on June 9, 2021.

See the announcing press release here ⇒Max Drachman Opens OOH M&A Firm 

If you have not sent a congratulatory note to Max hit his email here ⇒max@drachmanco.com

Never one to leave a story at its initial submission, OOH Today queried Max with a few more questions digging deeper for more. We hope you find the insights shared a bit more informative about the M&A business and of course, Drachman M&A, Co.

Bill Board: How do you assess the M&A field for OOH?

Max Drachman: It’s an exciting time for M&A.  We’re keeping an eye on inflation, but as of today, interest rates remain low, and our medium keeps growing.  Those two dynamics alone will propel M&A, yet there are many other factors propelling the industry forward.  It has been exciting to see the new groups of buyers enter the space in recent years, with more coming seemingly every week.

BB: Max what are those ‘other factors?’  When you say ‘new buyers’ what do you mean by ‘new’? Someone who has never been in OOH before?  Is that a good thing?  Or you mean people who have been in OOH but now become enamored with owning an OOH plant?  What are the top 3 attributes a ‘new buyer’ who has not owned a plant before should possess?

MD:  Some of the other factors include contraction in other mediums.  When you look at the competitive landscape overall, OOH is one of very few mediums that features consistent growth.  Much of that is coming from within with better sales practices, organic growth, reach, measurement etc., but a lot of it is coming from increased share of the overall advertising pie. When I refer to new buyers, I mean new private equity sponsored management teams, existing tower companies, and other media-based businesses that are looking to diversify into OOH.  Some of these groups have been in OOH in the past, but many of them are brand new to the space.  In terms of what a new buyer should focus on to be successful is buying the right assets for what they are looking to accomplish.  Some are fortifying positions they already have locally, and some are looking to add a secure cash flowing vertical to their portfolio.  I would advise they consult with industry experts to help formulate a winning game plan.

BB: You mentioned moving into other sectors in the future. What is the future for Drachman past the OOH sector specifically?

MD: Towers will be next. There are a lot of similarities between Outdoor assets and Towers in terms of the business. A major difference being any given OOH display could have 1,000+ potential advertisers, whereas Towers have only three main carriers that you really want (along with a few dozen other potential tenants – Wireless Internet Service Providers, Two-Way Radio, Municipal, etc.).  We’re looking into Energy as well, again, some similarities in terms of land rights and barriers to entry.  Energy tends to have a lot of volatility which can also be good for M&A.   

BB: Are there any opportunities for the OOH industry to ‘participate’ in the future other sectors? Like if they own the land provide tower space? Energy?

MD: Tower leasing agents have been approaching Outdoor owners for years.  On paper, it makes sense – steel with height and power in dense urban areas.  That said, we have yet to see that materialize into a significant new revenue category for most OOH operators.  We are keeping an eye on it, and if we see an opportunity for OOH owners, we will definitely reach out en masse.

BB: You indicated OOH has a moat?  What do you mean by any other ‘biz with a moat?’ What is the OOH Moat? How does one cross or bridge the moat?

MD: OOH has one of the widest moats in business, and certainly within media. By “moat,” I’m referring to a barrier to entry. As Outdoor assets become non-conforming through changes in regulations, their value increases for two reasons – 1, landlords have less leverage in future lease negotiations, and 2, an operator does not have to worry about markets becoming saturated with other Outdoor assets that could put pressure on rates. Many businesses can show growth, but very few of them have barriers to entry outside of time, expertise, and capital. In Outdoor, it doesn’t matter how much time, expertise, or capital you have if there are not places that fit zoning or spacing requirements to build. So, on an individual asset level, you have the moat of protection from nearby development, and on a company-wide level, you have market share that is protected based on assets you have in the ground. Bridging the moat is difficult and rare, so finding another market to develop may be the answer.

BB: You indicated there are 10 to 25 deals a year.  That is a pretty fat range. Why the large margin between 10 and 25?

MD: It can be an unpredictable business. I’ve closed five deals in a month, and I’ve gone five months between closings. Sometimes that is due to macro-economic conditions, and sometimes it is just the ebb and flow of various deals and where they are in the process. 

BB: How do you speed or keep even flow to a deal to completion?  What can an M & A professional do to keep the process moving forward and actually speed it to completion?

MD: Sometimes mistakes can happen with too much speed, and everyone has heard the phrase that “time kills deals.” The key is finding the right pace for the deal, and that’s based on gut feel and experience. Having done 100+ Outdoor deals in the last 10 years, finding the right cadence for moving a deal along comes from instincts as opposed to analytics.

BB: Do you anticipate an increase in the number of M&A opportunities in the industry or will it be a matter of same average number of transaction opportunities, but you will take a bigger share of the pie?

MD: That’s a good question, but difficult to answer. I do see plenty of opportunities ahead, and we’ll be working very hard to handle as much of it as possible. 

BB: If you had to place a time on the start to finish in closing an acquisition how many days would it be? What is the number one or most common breakdown in delaying a close?

MD: Most deals close within 90 days start-to-finish from the start of the process to the wire hitting.  We’ve closed them in less than 40 days before under unique circumstances, and have had a few that have stretched out a bit longer. The most common issue delaying a deal is having all of the lease and other pertinent diligence information ready to show a buyer upon signing a LOI.  Often times it is a much longer process than a seller predicts, and can often delay closing.

BB: What makes Drachman the go to firm of choice?

MD: The most important thing a potential seller can do when picking an advisory firm is ask a lot of questions. Ask about experience. Ask how many deals they have done that are comparable to the assets you intend to divest. Ask about references that you can call – and then ask those references if they know anyone else who might have something to say about the firm. Integrity, track record, and reputation are everything in this business, and the more you get to know your advisor, the better off you are in assessing whether they are a fit.

Thanks to Max Drachman for his willingness to provide more in depth answers and time in sharing. We look forward to hearing more about Drachman M&A, Co in the near future. 

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