2014 Trade Show Industry M&A Market Ends in an Upswing
After several slow years during the recession, the mergers and acquisitions market for the exhibition and conference industries had an active year in 2014, according to Jordan, Edmiston Group, Inc.’s Year-end M&A Overview.
Even with the pickup in deals, though, the number of them fell from 64 in 2013 to 53 last year and deal value was down significantly from $3.75 billion in 2013 to $1.1 billion last year, in part because of major deals switched to broader categories that JEGI tracks.
There were several deals that occurred in the last quarter of 2014, the biggest being UBM’s buy of Advanstar Communications for $972 Million from hedge fund Anchorage Capital Group LLC and private equity companies Veronis Suhler Stevenson and Ares Management.
Also in the final quarter last year, Informa bought Hanley Wood Exhibitions for $375 million.
Other fourth-quarter deals included GES (Viad)acquisition of onPeak and Travel Planners, two event housing software and services providers, for an undisclosed sum; and i2i Events acquisition of Money20/20, an event for the financial services sector, for an undisclosed amount.
Richard Mead, JEGI’s managing director, discusses with TSNN Editor-in-Chief Rachel Wimberly 2014 deals and looks forward into this year.
TSNN: Compared with 2013, the number of deals fell somewhat and deal values fell sharply. Is it because of the several mega-deals that were in 2013, as opposed to an actual 'slowdown' in deals last year?
Mead: The number of transactions will fluctuate year-to-year due to timing considerations. 2013 saw four large deals in the events sector: Onex’s buyout of Nielsen Expositions for $950 million; Goldman Sachs’ acquisition of PSAV for $900 million; Emerald’s acquisition of GLM $335 million; and Vista Equity’s acquisition of Active Network for $946 million.
In 2014, Hanley Wood’s $375 million sale of its tradeshows to Informa was the largest pure events sale and was not enough to offset the four large deals in 2013.
JEGI included the sale of Advanstar for $972 million to UBM in the B2B Media sector, given its diverse area of b2b media assets, including print and events, in line with how we have categorized previous integrated B2B media deals.
TSNN: A lot of deals occurred near the end of 2014. Was there a reason why?
Mead: In the events space, there were 18 deals in Q4 versus only five in Q3. And, Q4 also saw the largest events deal of the year … the sale of the Hanley Wood’s exhibitions to Informa.
Based on JEGI’s current engagements and pipeline across all sectors, we are seeing a very vibrant M&A market early in 2015. There are a mix of factors playing into this, namely readily available capital from both the equity and debt markets, PE firms with historically large amounts of “dry powder” – capital that needs to be put to work, and greater confidence in the economic environment following a strong Q3 GDP and better employment numbers.
TSNN: PE seems to be very interested in the exhibitions market. Why is this sector attractive to them?
Mead: Events offer some very strong business model characteristics that are attractive to PE, such as strong margins and cash flow (making them financeable to the debt markets), little to no receivables risk, excellent forecasting capability (tradeshows generally know how they will fare months ahead of the event), little working capital requirements, and relatively small staffing.
Plus, events platforms give investors the opportunity to add other non-event revenue streams, such as magazines, online media, data and research, to deepen the relationships within the served communities.
TSNN: Where do you see deals going into this year? More? Less? Higher/lower values?
Mead: Many of the larger privately-owned tradeshow portfolios (not in the hands of associations) traded over the past two years, so I don’t think we’re going to see a sizable increase in deal value in 2015. Clarion was acquired recently by Providence Equity, as their second foray into the events industry, and one or two other events platforms could trade this year.
However, I do think we’ll see an increase in the number of events deals in 2015, as events platforms are playing an increasing role in B2B marketing and lead generation. Owners see valuations being strong in the marketplace, and well-heeled domestic and international consolidators, including the Chinese, are looking for acquisitions to deepen market penetration and to supplement organic growth.
TSNN: What about international players. Are they going to be as active as they have been?
Mead: Yes, major European strategic buyers – public companies and the state owned operators – continue to look for acquisitions, particularly in the US given its market size, growth prospects, and marketing sophistication.
The Chinese event industry could also be acquisitive internationally. It will be an interesting couple of years as the majors vie for market position in events, and there could also be consolidation amongst the majors themselves.