91探花

Funding is the fuel that powers growth and transformation. Access to sufficient capital is crucial for a scaling media business, allowing it to invest in new technologies, expand operations and innovate to stay competitive in a rapidly evolving industry. This allows the business to achieve and unlock opportunities and add value to the business, especially if an exit is on the horizon. When future planning, media businesses need to have a clear vision of their goals. A business with a strong growth story, underpinned by robust trading and a growing pipeline will attract the right buyers, who will be willing to pay a premium.

For any business that is intending to sell, it is about creating the right first impression, articulating the growth story and how a buyer could build on this. This also applies when looking at securing funding.

Funding round vs planning an exit 

When asked whether business leaders were planning either a funding round or planning an exit, 35% of our 300 survey respondents said they are planning a funding round in the next 11 months. When it came to exit planning, the largest proportion of business leaders said in 1-2 years. There are several things that should be top of the priority list if working towards this exit goal:

• consider if there are any gaps in the senior management team and if they are appropriately incentivised to support the business through its next stage of growth;
• strong underlying level of repeat business and year-on-year account growth that helps to build credibility on the delivery of a pipeline; and
• a clear digital strategy showing how artificial intelligence and data analytic tools are going to be adopted. This is becoming strategically important to many buyers. 

Only 13% of our respondents were not planning an exit in the future, and only 7% were not looking to secure more funding – highlighting the constantly changing nature of the media sector, where nothing stands still for long, and most businesses see themselves as being on a trajectory. 

Majority of media businesses have secured funding, but challenges remain

Our research found that 49% of our respondents have found it easy to access funds in the last six months. But 19% reported experiencing difficulties in securing funding. Our findings also showed that 24% were unable to secure funding in the UK but had success internationally. Only 8% were unsuccessful in securing funds both in the UK and internationally. 

The funding landscape has changed. Our survey conducted in 2023 of 200 media and technology businesses showed that only 33% found it easy to access funding. The uptick in funding success is encouraging and suggests that investors are optimistic. 

The balance of funders is changing

The media industry continues to rely on debt as a key source of funding, with only 10% of our 300 respondents not having any current debt. When we asked what kind of debt the company currently has, challenger banks took the top spot. However, it was almost an equal split between the different debt providers, acting as a reminder that the funding market is growing increasingly diverse, with media companies increasingly looking beyond the high street for their borrowing.

Borrowing is reducing in the media landscape

Of the 300 business leaders, 49% said they have less debt now compared to six months ago. However, 24% currently have more. In comparison, our 2023 survey found that 56% had more debt at the time of answering than they did six months prior. This reflects a broader trend in the UK economy, whereby businesses, particularly smaller ones, are focusing on paying off their debt as a primary use of their cash flow. This is a mixed blessing – for those that were overleveraged, this can put them in a stronger position, but for others it means that they’re putting off investment for the future. 

Sales and marketing a key area to deploy investment, closely followed by international expansion 

37% of our respondents indicated that the capital gained would be invested in sales and marketing, to help fuel organic growth and further develop a competitive advantage. This was followed closely by international expansion being the focus for 36% of respondents. However, despite a slowdown in 2022 and 2023 on global dealmaking activity, it was encouraging to see that 25% of business leaders will look to prioritise funding secured, to finance acquisitions. Although this is a lower priority, it does indicate that there is appetite for the right investments and more optimism and activity is expected in the year ahead. The high cost of debt is making buyers more selective over acquisitions, but these are still on the agenda to create growth, with an increase in interest since 12 months ago. 

North America, the most popular region for expansion

40% of respondents suggested North America was the most popular region for expansion, closely followed by Europe. This is unsurprising, given the US Media and Entertainment (M&E) industry is the largest in the world at $660bn. However, it is important to consider the 39% of respondents who answered Europe as, although historically the US has been the biggest market driving mergers and acquisitions (M&A) activity, Europe has become just as strategically important in terms of target markets.

What’s next for media businesses when it comes to funding?