The Billboard Insider Podcast
00:09:15 · Dave Westburg, Jim Johnsen
[00:09:15] S0: Yes. [00:09:15] S1: That's certainly an aspect of it. Certainly, you've you've gotta take the heat from both sides. Both sides want to shout at the other side, and it's best if they shout at the banker who then goes back and Yeah. And rephrases it or who who repackages it in a way that's digestible for the other... The counterparty. So there's certainly some of that. And then, you know, the other thing that is hard to put a value on and hard to estimate, but I know it's there, is when a seller hires an investment banker and then an investment banker approaches the market and begins to engage buyers, there's a level of trust there that the buyer is taking away from that banker being in the transaction. Because while a seller may sell its assets and go off to the beach in one transaction, the the banker's gotta make its mark in the industry for the next twenty, thirty, fifty years, whatever, and as a result, has a reputation to uphold. And and I think buyers take some level of trust in the fact that, they're not gonna get snookered in a transaction if a banker's involved. [00:10:12] S0: Mhmm. You touched on the out of home debt markets. I'd like to talk about the out of home capital markets. Let's start with debt. My sense is there there have never been so many providers as there are right now. What's your take? [00:10:24] S1: I think you're right about that, Dave. I think short of one period in history, which I really loved, which was, like, sort of 1990 to 1995 back when Chase Manhattan Bank would lend somebody 10,000,000. Or
00:10:24 · Jim Johnsen, Dave Westburg
[00:10:24] S1: I think you're right about that, Dave. I think short of one period in history, which I really loved, which was, like, sort of 1990 to 1995 back when Chase Manhattan Bank would lend somebody 10,000,000. Or [00:10:37] S0: State Street. They were in. [00:10:39] S1: State Street Bank, Bank of New England, Boston Bank, Union Bank of California [00:10:45] S0: Yes. [00:10:45] S1: Etcetera, etcetera, etcetera. So that was a really sort of a vibrant period for media lending. And I would venture a guess that most of those guys have vacated media lending, number one, because their balance sheets got larger. And as a result, they couldn't justify doing $10,000,000 deals any longer. And then number two, let's not forget that a a vast swath of the media industry has been wiped out or or dramatically negatively impaired, right, whether we're talking about linear television or radio or newspaper or publishing and and so forth. So it is true that it's now sort of a... You've got a healthy sort of, stable of outdoor lenders. A good portion of the media lending business has been wiped out. I'd love to hear your thoughts on that, Dave, because you're... You've you've spent a a good part of your career in me.
00:10:45 · Jim Johnsen, Dave Westburg
[00:10:45] S1: Etcetera, etcetera, etcetera. So that was a really sort of a vibrant period for media lending. And I would venture a guess that most of those guys have vacated media lending, number one, because their balance sheets got larger. And as a result, they couldn't justify doing $10,000,000 deals any longer. And then number two, let's not forget that a a vast swath of the media industry has been wiped out or or dramatically negatively impaired, right, whether we're talking about linear television or radio or newspaper or publishing and and so forth. So it is true that it's now sort of a... You've got a healthy sort of, stable of outdoor lenders. A good portion of the media lending business has been wiped out. I'd love to hear your thoughts on that, Dave, because you're... You've you've spent a a good part of your career in me. [00:11:34] S0: I can think of at least... You know, there are there are leasing companies like JCDecaux, still very active. There are private finance firms, couple private... You know, my Billboard Loans company, Chris Stark, Stark Capital, active in the loans of, you know, 1,000,000, 2,000,000, and less. Above about 3,000,000, you have some players like Verde and Alaris Financial. And my read is it's been good times. Bank balance sheets are strong. There's a lot of community and local banks that are lending. They'll flee the market if we have another recession just like they fled the market in 2009, but the... It's quite a, it's quite a good market right now in terms of lenders.
00:11:34 · Dave Westburg, Jim Johnsen
[00:11:34] S0: I can think of at least... You know, there are there are leasing companies like JCDecaux, still very active. There are private finance firms, couple private... You know, my Billboard Loans company, Chris Stark, Stark Capital, active in the loans of, you know, 1,000,000, 2,000,000, and less. Above about 3,000,000, you have some players like Verde and Alaris Financial. And my read is it's been good times. Bank balance sheets are strong. There's a lot of community and local banks that are lending. They'll flee the market if we have another recession just like they fled the market in 2009, but the... It's quite a, it's quite a good market right now in terms of lenders. [00:12:11] S1: Yeah. I I would agree with you, Dave. And and as part of our practice, we do valuations and appraisals in conjunction with guys trying to close bank loans. And so we see across the country a whole bunch of regional and local banks that are jumping in. And I'd say primarily because of the relationship. Good entrepreneurs will build relationships with local bankers and develop those over time and cultivate those and and keep those valuable, keep keep them close to their heart. And those lenders will, you know, take the time to learn the outdoor business well enough to lend to one, two, three, five customers. They'll never have a portfolio of of Billboard loans, but they'll, you know, they'll they'll view those as as pretty interesting to the bank, if you will.
00:12:11 · Jim Johnsen, Dave Westburg
[00:12:11] S1: Yeah. I I would agree with you, Dave. And and as part of our practice, we do valuations and appraisals in conjunction with guys trying to close bank loans. And so we see across the country a whole bunch of regional and local banks that are jumping in. And I'd say primarily because of the relationship. Good entrepreneurs will build relationships with local bankers and develop those over time and cultivate those and and keep those valuable, keep keep them close to their heart. And those lenders will, you know, take the time to learn the outdoor business well enough to lend to one, two, three, five customers. They'll never have a portfolio of of Billboard loans, but they'll, you know, they'll they'll view those as as pretty interesting to the bank, if you will. [00:12:55] S0: What about private equity? You know, I I know because I know who subscribes to Billboard Insider, And I would say there has been a steady increase in the number of private equity players who subscribe to Billboard Insider, and and it seems like there's been... Private equity is very interested in out of home right now. [00:13:13] S1: I would say that's very true, Dave, and it's been true for a period of time, at least at least from our perspective. I I I can't count a week that we don't get three or four calls from private equity groups saying, hey. We've done we've done a white paper on the out of home business, or we've we've studied out of home business, or we bought some Lamar stock, and that worked out well. So how do we get into this in a deeper way? [00:13:35] S0: Yep.
00:13:35 · Dave Westburg, Jim Johnsen
[00:13:35] S0: Yep. [00:13:36] S1: And so the interest is really, really strong. The dilemma for the private equity business is how do they get scale? [00:13:41] S0: Mhmm. [00:13:42] S1: And getting scale in the out of home business, unless you're prepared to put in the time and the hard work, is very difficult. [00:13:49] S0: Yes. [00:13:49] S1: There's just there's only... There's just so many Adams out there, right, [00:13:53] S0: Right. [00:13:53] S1: That size and that and and then, you know, sort of the size of companies drops off pretty quickly. And most of these private equity guys these days wanna write a $50,000,000 check, a $100,000,000 check, and and upwards. And for them to, you know, justify writing a $50,000,000 check, they need a pretty sizable company in the out of home business. [00:14:13] S0: And And there's only so many. There's just only so many. [00:14:16] S1: Exactly. Exactly. So that's the rub. But having said that, and I I would... You know, I'd love to hear more about the guys that are subscribing to Billboard Insider. But we have seen of late several several groups coming down market. [00:14:30] S0: Yes. [00:14:30] S1: Meaning meaning instead of requiring 10,000,000 of EBITDA, they're, you know, they're interested in companies that are doing 1 to 2,000,000 of EBITDA. Mhmm. So