By: Kent Anderson, “The Geyser”
On January 5th, John Wiley & Sons announced its acquisition of the London-based Hindawi. Founded in 1997 in Cairo, Hindawi journals have been fully OA since 2007. The acquisition comes after Wiley partnered with Hindawi a few years ago to convert more than a dozen journals to Gold OA, and fits a pattern of incrementalism and cautious, unfussy acquisition that’s become a Wiley hallmark.
At the end of 2020, Hindawi was projecting revenues of $40 million, making it about the size Atypon was when it was acquired by Wiley in 2016. Atypon was acquired for just north of a 3x multiple. Surprisingly, Wiley paid a far greater multiple for Hindawi, expending $298 million for the publisher, or a multiple north of 7x. This seems like a very high valuation for a publisher with no recurring revenues, until you see that Hindawi had an EBITDA of 45% and sizable and immediate free cash flow.
Paul Peters comes along with the deal, which is a good thing for Wiley. Peters has evolved into one of the strongest strategists and connectors in publishing. He also will help keep things running, as Hindawi is famously scant in full-time employees. There probably aren’t many layers below him.
This raises a key issue, however — Wiley has a mixed track record of allowing acquisitions to modify their corporate DNA. As with any large firm, there are a lot of entrenched interests below the CEO, and they can find little ways to make things difficult. It will be interesting to see how long Peters — who is no doubt accustomed to having something approaching full remit in decisions and actions — lasts in a culture of layers, CYA, and competing interests. Like Atypon’s founder, he may remain for a while, and then quietly depart.
This acquisition also continues the consolidation of the scholarly publishing space. Challenges to recurring (subscription) revenues will make similar acquisitions — large operations with relatively stable non-recurring revenues — more appealing. Once again, we see that Gold OA and technology both drive consolidation.
With the stock market up, cash on the sidelines, and expenses down in a number of categories due to Covid-19 restrictions, we can expect more acquisitions in 2021.
This may be just the start.
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