Latest / Uphoff on Media Podcast / AI Stopped Being a Story. Now It's in Your Multiple

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AI Stopped Being a Story. Now It's in Your Multiple · Uphoff on Media Podcast

• 0:01
  SPEAKER_00: Hey, it's Tony.
• 0:03
  SPEAKER_00: Most leadership teams learn what their business is worth when a buyer tells them.
• 0:08
  SPEAKER_00: By then, every decision that shaped that number has already been made.
• 0:13
  SPEAKER_00: Whether you're running a B2B business,
• 0:15
  SPEAKER_00: funding one or building one, part of your job is making it more valuable.
• 0:19
  SPEAKER_00: But value creation is a phrase most teams can't connect to the day-to-day work in front of them.
• 0:25
  SPEAKER_00: If there's an exit on the horizon,
• 0:27
  SPEAKER_00: the hard part is lining up today's decisions with that goal and that timeline
• 0:31
  SPEAKER_00: and making sure you're building value where buyers actually pay for it.
• 0:36
  SPEAKER_00: That's getting harder.
• 0:37
  SPEAKER_00: Growth and margin used to explain most of what these businesses were worth.
• 0:42
  SPEAKER_00: They explain less now.
• 0:43
  SPEAKER_00: This quarter, six of eight B2B categories repriced and all of them went down.
• 0:49
  SPEAKER_00: I built the Uphoff Value Index,
• 0:51
  SPEAKER_00: the UVI,
• 0:52
  SPEAKER_00: to close that gap,
• 0:54
  SPEAKER_00: to connect the decisions you make every day to the value you want to create and
• 0:58
  SPEAKER_00: the exit you're planning for.
• 1:00
  SPEAKER_00: Today's episode is the first quarterly UVI index.
• 1:05
  SPEAKER_00: AI stopped being a story, now it's your multiple.
• 1:09
  SPEAKER_00: I'll walk through what moved in each of the eight categories,
• 1:12
  SPEAKER_00: the two new drivers buyers are pricing, and what it means for you.
• 1:16
  SPEAKER_00: Okay, let's get to work.
• 1:22
  SPEAKER_00: Six of eight B2B categories repriced this quarter, all of them down.
• 1:26
  SPEAKER_00: AI exposure explains most of the move,
• 1:29
  SPEAKER_00: size explains the rest, and buyers now test AI defensibility before anything else.
• 1:40
  SPEAKER_00: The Uphoff Value Index tracks what buyers pay for B2B information,
• 1:44
  SPEAKER_00: marketing and technology businesses, and why it changes.
• 1:47
  SPEAKER_00: Each quarter,
• 1:48
  SPEAKER_00: this report shows what moved and what it means if you're building,
• 1:51
  SPEAKER_00: running, or funding one.
• 1:53
  SPEAKER_00: Bit of background first, what the UVI is and who it's for.
• 1:57
  SPEAKER_00: What it is,
• 1:58
  SPEAKER_00: the Uphoff Value Index is a valuation benchmark for B2B information,
• 2:02
  SPEAKER_00: marketing, and technology businesses.
• 2:04
  SPEAKER_00: It starts where a buyer starts with an EBITDA multiple range for each of
• 2:09
  SPEAKER_00: the eight categories,
• 2:10
  SPEAKER_00: then estimates where a company It sits in that range based on three key factors.
• 2:15
  SPEAKER_00: Growth and margin read together, so strength in one can offset the other.
• 2:19
  SPEAKER_00: Revenue per employee measured against the category's own peers.
• 2:23
  SPEAKER_00: And protection against AI disruption, which is a new factor this quarter.
• 2:28
  SPEAKER_00: The eight categories tracked are B2B Media,
• 2:32
  SPEAKER_00: Media and Events,
• 2:33
  SPEAKER_00: Business Intelligence, Data,
• 2:35
  SPEAKER_00: Marketing Services,
• 2:36
  SPEAKER_00: MarTech and AdTech, Demand Generation and Content Syndication, and B2B Events.
• 2:43
  SPEAKER_00: What it's built on,
• 2:44
  SPEAKER_00: there's three sources,
• 2:45
  SPEAKER_00: disclosed M&A transactions,
• 2:47
  SPEAKER_00: the trading multiples of a fixed set of public companies in each category,
• 2:51
  SPEAKER_00: and research from the advisors who run these sales processes.
• 2:55
  SPEAKER_00: This quarter,
• 2:56
  SPEAKER_00: that includes Collingwood's 2026-27 market report,
• 3:01
  SPEAKER_00: a survey of about 100 active acquirers across information, media,
• 3:05
  SPEAKER_00: and events,
• 3:06
  SPEAKER_00: and the source of the deal counts and buyers in the findings in this report.
• 3:10
  SPEAKER_00: The ranges are checked every quarter and fully reset at least once a year.
• 3:15
  SPEAKER_00: A range only moves when the evidence moves it by a half turn of EBITDA or more,
• 3:19
  SPEAKER_00: so a company's number changes when the market does, not when a stock has a bad week.
• 3:24
  SPEAKER_00: The UVI Review Panel,
• 3:26
  SPEAKER_00: a group of operators,
• 3:27
  SPEAKER_00: investors,
• 3:28
  SPEAKER_00: investment bankers,
• 3:29
  SPEAKER_00: and industry analysts who work across these categories,
• 3:32
  SPEAKER_00: reviews every update before it ships.
• 3:35
  SPEAKER_00: How you can use it.
• 3:36
  SPEAKER_00: The Uphoff Advisory Client Tool pairs that estimate with a diagnostic of
• 3:42
  SPEAKER_00: the five value drivers that build what a business is worth over time.
• 3:46
  SPEAKER_00: They are revenue quality,
• 3:47
  SPEAKER_00: market position, operational leverage, leadership depth, and exit readiness.
• 3:53
  SPEAKER_00: This quarter's ranges,
• 3:54
  SPEAKER_00: the new AI protection score and revenue per employee for every category,
• 3:59
  SPEAKER_00: go live in the client tool on uphoffadvisory.com later this month.
• 4:04
  SPEAKER_00: Who this is for?
• 4:06
  SPEAKER_00: Operators running these businesses, investors funding them, and founders building them.
• 4:10
  SPEAKER_00: As I argued in the post, how much is my business worth is the wrong question.
• 4:14
  SPEAKER_00: The exit multiple is a report card on decisions made years earlier.
• 4:19
  SPEAKER_00: I've been CEO of five businesses, each one a turnaround or a transformation.
• 4:23
  SPEAKER_00: Every time the value the next owner paid for was built or spent long
• 4:28
  SPEAKER_00: before anyone talked about a sale.
• 4:30
  SPEAKER_00: Most leadership teams learn what their business is worth when a buyer tells them.
• 4:34
  SPEAKER_00: I built the UVI to show them while there's still time to change it and
• 4:37
  SPEAKER_00: to line up today's decisions with the value they want to create and
• 4:41
  SPEAKER_00: the exit they're planning for.
• 4:43
  SPEAKER_00: Because every decision has a multiple.
• 4:48
  SPEAKER_00: Okay, let's get into the details.
• 4:51
  SPEAKER_00: Q3, 2026, six of eight categories repriced.
• 4:54
  SPEAKER_00: The dividing line is AI exposure at the revenue line.
• 4:57
  SPEAKER_00: Data, B2B media, and MarTech fell because AI is already visible in their revenue.
• 5:02
  SPEAKER_00: Business intelligence held its ceiling because buyers keep paying for the data AI needs.
• 5:09
  SPEAKER_00: The deal counts agree.
• 5:10
  SPEAKER_00: Information deals rose 88% in the first half of 2026 from 51 to 96 and event deals rose 31%.
• 5:19
  SPEAKER_00: Media deals fell 46% from 54 to 29.
• 5:24
  SPEAKER_00: Size now shows up in price.
• 5:25
  SPEAKER_00: The year's headline deals carry a scale premium most businesses in these categories won't see.
• 5:30
  SPEAKER_00: So two ranges move down to price the lower middle market.
• 5:35
  SPEAKER_00: And AI defensibility has become the gate.
• 5:38
  SPEAKER_00: Buyers test it before they look at growth or margin.
• 5:41
  SPEAKER_00: On average,
• 5:42
  SPEAKER_00: 60% of the sale processes buyers entered never close,
• 5:45
  SPEAKER_00: and more of them now and quietly before launch.
• 5:50
  SPEAKER_00: Where AI reached the revenue line, the multiple followed.
• 5:54
  SPEAKER_00: In the data category,
• 5:55
  SPEAKER_00: in July,
• 5:56
  SPEAKER_00: the debate about contact and intent data was whether
• 5:59
  SPEAKER_00: the market had priced AI disintermediation too early Zoom Info's second quarter
• 6:04
  SPEAKER_00: settled it,
• 6:05
  SPEAKER_00: revenue up 1.2%,
• 6:07
  SPEAKER_00: a full-year outlook that still points to a decline of about 3%,
• 6:12
  SPEAKER_00: a $650 million impairment, and the stock down about two-thirds in a year.
• 6:17
  SPEAKER_00: Buyers have stopped discounting a future threat and started discounting revenue
• 6:20
  SPEAKER_00: that no longer grows.
• 6:22
  SPEAKER_00: Zoom Info's 35% adjusted operating margin doesn't earn premium on a flat top line.
• 6:28
  SPEAKER_00: I looked at what that means for go-to-market data businesses in last Monday's post,
• 6:33
  SPEAKER_00: B2B marketing is driving forward, looking backward.
• 6:37
  SPEAKER_00: The B2B Media category,
• 6:39
  SPEAKER_00: the category's best public reference point used to be TechTarget with margins north
• 6:44
  SPEAKER_00: of 30% before the Informa combination.
• 6:47
  SPEAKER_00: Informa TechTarget now runs 10% to 13% margin on revenue down 3%,
• 6:53
  SPEAKER_00: and it has written off nearly $1 billion of goodwill since the start of 2025,
• 6:59
  SPEAKER_00: including $45 million in the first quarter of this year.
• 7:04
  SPEAKER_00: Buyers value digital media businesses with $5 to $10 million of EBITDA at 6.5
• 7:10
  SPEAKER_00: to 9.5 times EBITDA.
• 7:13
  SPEAKER_00: Advertising-led media lost its best argument for a higher multiple.
• 7:17
  SPEAKER_00: The value hasn't left the category, however.
• 7:19
  SPEAKER_00: It's moving to the businesses that turn an audience into data a buyer can use.
• 7:24
  SPEAKER_00: Media companies with real data revenue already price that way and they belong in
• 7:29
  SPEAKER_00: the business intelligence category.
• 7:33
  SPEAKER_00: Martech and AdTech, the ceiling move because the company holding it up move.
• 7:37
  SPEAKER_00: The Trade Desk set the top of this range for years
• 7:40
  SPEAKER_00: and now trades around six times EBITDA with the stock down three quarters in a year.
• 7:45
  SPEAKER_00: Zeta Global growing 44% trades around 19 times forward EBITDA,
• 7:50
  SPEAKER_00: but a single company growing at that rate is an outlier.
• 7:54
  SPEAKER_00: Credio's falling revenue marks the floor.
• 7:56
  SPEAKER_00: In this category, growth is the multiple and very few businesses have it.
• 8:02
  SPEAKER_00: Intelligence held its ceiling.
• 8:03
  SPEAKER_00: In events, scale is what gets paid.
• 8:06
  SPEAKER_00: Business Intelligence, two strategic buyers paid up for data that AI agents need.
• 8:12
  SPEAKER_00: Publicist for LiveRamp at about 12.3 times forward adjusted EBITDA and Nielsen
• 8:17
  SPEAKER_00: for DoubleVerify at about $2.15 billion.
• 8:22
  SPEAKER_00: DoubleVerify's growth had slowed to under 3%, so the low end of the range widened.
• 8:26
  SPEAKER_00: Proprietary data still commands a premium.
• 8:29
  SPEAKER_00: Slow growth still costs you even when the data is good.
• 8:33
  SPEAKER_00: Events, Emeril,
• 8:35
  SPEAKER_00: Closer Steel and Hive priced at an estimated 11 to 14 and a half times EBITDA in
• 8:40
  SPEAKER_00: the same handful of private equity firms is now buying event businesses
• 8:44
  SPEAKER_00: from each other.
• 8:45
  SPEAKER_00: That's what scarcity looks like at the top of a market.
• 8:49
  SPEAKER_00: Most event businesses aren't at the top.
• 8:51
  SPEAKER_00: Buyers value organizers with $5 million to $10 million of EBITDA at 9 to 12.5 times
• 8:57
  SPEAKER_00: for trade shows and 6 to 9.5 times for conferences.
• 9:01
  SPEAKER_00: And the largest buyers are already refusing to look at anything under $2
• 9:05
  SPEAKER_00: to $3 million of EBITDA unless it fits closely with what they already own.
• 9:10
  SPEAKER_00: The demand for events is real.
• 9:12
  SPEAKER_00: An agent can't replicate a room full of decision makers.
• 9:15
  SPEAKER_00: The UVI range moved down from 10 to 16 times to 8 to 14 to price the businesses
• 9:21
  SPEAKER_00: that most operators actually run.
• 9:25
  SPEAKER_00: In services, the spread inside the range is the story.
• 9:28
  SPEAKER_00: Demand generation and content syndication.
• 9:31
  SPEAKER_00: No new disclosed transaction this quarter.
• 9:33
  SPEAKER_00: Public comps and private market buyer conversations point the same way.
• 9:37
  SPEAKER_00: Demand generation and sponsorship businesses owned by media companies trade at 6.5
• 9:41
  SPEAKER_00: to 10 times EBITDA.
• 9:43
  SPEAKER_00: Two things hold that pricing down.
• 9:45
  SPEAKER_00: The hangover from the pandemic boom,
• 9:47
  SPEAKER_00: when event budgets move to leads and then move back,
• 9:50
  SPEAKER_00: and a flood of low-cost lead providers that has taught buyers
• 9:53
  SPEAKER_00: to discount lead quality across the category.
• 9:56
  SPEAKER_00: The top of the 7 to 12 time range comes from the exception, and the exception is real.
• 10:01
  SPEAKER_00: Intent-led businesses with recurring revenue that can show which accounts are
• 10:06
  SPEAKER_00: in market and prove the return are starting to pull away from media pricing.
• 10:10
  SPEAKER_00: My read,
• 10:11
  SPEAKER_00: the market is two to three years from treating that revenue as subscription-like
• 10:17
  SPEAKER_00: and pricing it that way.
• 10:19
  SPEAKER_00: Full disclosure, I am a board advisor to Pipeline 360, which competes in this category.
• 10:24
  SPEAKER_00: Marketing services.
• 10:25
  SPEAKER_00: The range held it 8 to 14 times.
• 10:27
  SPEAKER_00: What changed is how buyers place a firm inside it.
• 10:31
  SPEAKER_00: The holding companies set the ceiling for generalists.
• 10:33
  SPEAKER_00: Omnicom trades at about 7.8 times EBITDA,
• 10:37
  SPEAKER_00: which limits what the biggest buyers can pay for an agency
• 10:39
  SPEAKER_00: that looks like what they already own.
• 10:42
  SPEAKER_00: The premium goes to firms that don't look like that.
• 10:44
  SPEAKER_00: The average agency does about $163,000 of revenue per employee.
• 10:49
  SPEAKER_00: The median public software company does about $395,000.
• 10:54
  SPEAKER_00: Agentic workflows are closing that gap one firm at a time and buyers pay for
• 10:59
  SPEAKER_00: the firms that close it.
• 11:01
  SPEAKER_00: Take two agencies with identical P&Ls, $11 million of revenue, $2 million of EBITDA, 15% growth.
• 11:08
  SPEAKER_00: One runs with 68 people, the other with 40.
• 11:11
  SPEAKER_00: Last quarter, the index valued both at 9.8 times.
• 11:15
  SPEAKER_00: Now the 40-person firm is worth 10.3 times, about 1 million more on the same earnings.
• 11:21
  SPEAKER_00: Services is where the gap is widest and where it will reprice firms fastest.
• 11:27
  SPEAKER_00: Revenue per employee now moves the multiple.
• 11:30
  SPEAKER_00: Revenue per employee is the cleanest single read on whether technology
• 11:33
  SPEAKER_00: or headcount is doing the work.
• 11:35
  SPEAKER_00: Starting this quarter,
• 11:36
  SPEAKER_00: the UVI measures it in all eight categories,
• 11:39
  SPEAKER_00: each against its own public peers because the bar isn't the same everywhere.
• 11:43
  SPEAKER_00: Listed B2B media companies Fund about 260,000 to 370,000 per employee.
• 11:46
  SPEAKER_00: Research and advisory firms about $280,000 to $320,000.
• 11:49
  SPEAKER_00: And MarTech and AdTech platforms around 390,000 to 780,000.
• 12:00
  SPEAKER_00: A firm at its category's baseline gets no adjustment.
• 12:03
  SPEAKER_00: A firm approaching the top of its peer range earns a full turn of EBITDA
• 12:07
  SPEAKER_00: and one well below takes a discount.
• 12:10
  SPEAKER_00: A B2B media business doing $333,000 per employee picks up more than a half turn,
• 12:16
  SPEAKER_00: about $1.7 million on $3 million of EBITDA.
• 12:22
  SPEAKER_00: Growth and margins set the multiple.
• 12:24
  SPEAKER_00: AI defensibility decides whether you get one.
• 12:27
  SPEAKER_00: For years,
• 12:28
  SPEAKER_00: growth plus margin explained most of the difference
• 12:30
  SPEAKER_00: in what these businesses were worth.
• 12:32
  SPEAKER_00: It explains less now.
• 12:34
  SPEAKER_00: Companies with similar growth and similar margins are trading far apart,
• 12:38
  SPEAKER_00: and the gap comes down to how defensible they are against AI.
• 12:41
  SPEAKER_00: In Collingwood's survey of about 100 buyers,
• 12:45
  SPEAKER_00: 91% called the AI resilience of the business model essential or important.
• 12:50
  SPEAKER_00: 86% of buyers said the same of the end market and 74% of a direct relationship with
• 12:57
  SPEAKER_00: the customer.
• 12:58
  SPEAKER_00: Buyers now sound out businesses six to 12 months before a sale and 60%
• 13:03
  SPEAKER_00: of processes never reach a close.
• 13:06
  SPEAKER_00: So starting with this quarter's update,
• 13:08
  SPEAKER_00: the UVI Scores AI Defensibility AI Disruption Protection asks four questions
• 13:14
  SPEAKER_00: of every business in every category.
• 13:16
  SPEAKER_00: Number one, substitution.
• 13:18
  SPEAKER_00: Could AI reproduce what customers pay you for?
• 13:21
  SPEAKER_00: Number two, customer exposure.
• 13:22
  SPEAKER_00: How exposed is your customer's own business to AI?
• 13:26
  SPEAKER_00: Number three, relationship ownership.
• 13:29
  SPEAKER_00: Do you own the customer relationship or rent it from search and other platforms?
• 13:33
  SPEAKER_00: And number four, data mode.
• 13:36
  SPEAKER_00: Is your data hard to recreate and build into how customers work?
• 13:40
  SPEAKER_00: The adjustment is deliberately uneven.
• 13:43
  SPEAKER_00: A well-protected business earns up to a full turn of EBITDA and exposed one loses up
• 13:47
  SPEAKER_00: to a turn and a half because buyers treat AI defensibility as a gate,
• 13:51
  SPEAKER_00: not a sliding scale.
• 13:53
  SPEAKER_00: Two data businesses with identical P&Ls show the effect.
• 13:56
  SPEAKER_00: Five million of EBITDA, 5% growth, a 20% margin.
• 14:00
  SPEAKER_00: The one buyers believe is protected is worth 5.6 or 28 million.
• 14:05
  SPEAKER_00: The one they think AI can route around is worth four times your 20 million.
• 14:09
  SPEAKER_00: And it may never get a process started.
• 14:12
  SPEAKER_00: What this means if you're running, funding, or building one.
• 14:15
  SPEAKER_00: If you're running one, find your category and be honest about where you sit in it.
• 14:19
  SPEAKER_00: The market stopped paying for margin without growth this quarter.
• 14:22
  SPEAKER_00: If your margin is strong, your growth is flat.
• 14:24
  SPEAKER_00: It's no longer a premium story.
• 14:26
  SPEAKER_00: Fix the growth before you plan a process.
• 14:28
  SPEAKER_00: Work through the four AI questions before anyone calls
• 14:31
  SPEAKER_00: because buyers form their view on AI early and most processes never close.
• 14:36
  SPEAKER_00: Then track revenue per employee and cash conversion with the same discipline as EBITDA.
• 14:41
  SPEAKER_00: Buyers already are.
• 14:43
  SPEAKER_00: If you're funding one, the discounts in data and media aren't automatically opportunities.
• 14:48
  SPEAKER_00: Some of these businesses are cheap for a real reason.
• 14:51
  SPEAKER_00: Underwrite the revenue line and the cash it actually produces.
• 14:54
  SPEAKER_00: Ask for revenue for employee before you ask for EBITDA in every category.
• 14:58
  SPEAKER_00: And benchmark it against the right peers.
• 15:01
  SPEAKER_00: And watch the gap between public and private prices.
• 15:04
  SPEAKER_00: Listed information companies are down 20% to 30% from their late 2025 peak.
• 15:10
  SPEAKER_00: Private values are the best assets have held and historically
• 15:14
  SPEAKER_00: the private market follows with a lag.
• 15:18
  SPEAKER_00: If you're building one, Build where the multiple holds.
• 15:22
  SPEAKER_00: Proprietary data an agent needs and can't scrape,
• 15:24
  SPEAKER_00: experiences an agent can't replicate,
• 15:26
  SPEAKER_00: or a services model where each person carries software level revenue.
• 15:31
  SPEAKER_00: Own the customer relationship from day one because renting it from search
• 15:35
  SPEAKER_00: and other platforms is now a discount.
• 15:38
  SPEAKER_00: And build toward the size buyers will look at.
• 15:40
  SPEAKER_00: Below two to three million of EBITDA your value depends on finding a very specific buyer.
• 15:45
  SPEAKER_00: So knew who that buyer is.
• 15:48
  SPEAKER_00: The market isn't guessing about AI anymore.
• 15:51
  SPEAKER_00: It's reading the revenue line.
• 15:53
  SPEAKER_00: Make sure yours says what you think it does.
• 15:58
  SPEAKER_00: Well, that's it for this episode.
• 16:00
  SPEAKER_00: If you'd like to study the sources and methodology,
• 16:03
  SPEAKER_00: please visit upoffonmediaatsubstack.com and you can see all the sources and
• 16:09
  SPEAKER_00: the methodologies.
• 16:11
  SPEAKER_00: Well, that's it for this episode.
• 16:12
  SPEAKER_00: If you found this useful, please do one thing.
• 16:14
  SPEAKER_00: Follow the Uphoff on Media podcast on Apple or Spotify and leave a rating.
• 16:18
  SPEAKER_00: It's the single best way to help another operator find this.
• 16:22
  SPEAKER_00: I'm Tony Uphoff, back at it next week.