The blockbuster sale last year of U.S. show organizer Advanstar Communications to global information-service provider UBM plc for $972 million marked a milestone for the events industry. Advanstar’s 54 trade shows and 100 annual conferences vaulted U.K.-based UBM into top position as the largest organizer of business-to-business (B2B) trade shows and conferences in the United States. The purchase heralded a strategic shift for UBM: focusing on event acquisition and development to lead its global expansion.
It also capped two years of robust merger-and-acquisition activity within the B2B media/event space, where the volume of deals has returned to pre-recession levels, according to the Jordan, Edmiston Group Inc. (JEGI), an investment bank specializing in M&A transactions in media/events, technology, and marketing. Indeed, in the exhibitions-and-conferences sector, JEGI identified 64 M&A deals valued at a total of $3.8 billion in 2013 and 53 deals valued at $1.1 billion last year.
What’s behind this upswing? Increased confidence in the economic environment, low borrowing costs, and a vast supply of available investment capital have fueled a bonanza of mergers and acquisitions across the spectrum of business and industry. As for events in particular, “they offer business-model characteristics that are attractive to investors — strong margins and cash flow, little to no receivables risk, little working-capital requirements, and relatively small staffing,” said Richard Mead, JEGI’s managing director. “Event platforms also give investors the chance to add revenue streams from magazines, online media, data, and research.”
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While for-profit show organizers and B2B media companies are the focus of most M&A deals in the event space, entrepreneurial associations increasingly are getting in on the act to strengthen their events and community brands. Likewise, leading event suppliers are making deals to broaden their suite of services. It’s all part of a consolidation trend that is transforming the events industry into a more global and integrated enterprise.
GLOBAL REACH THROUGH EVENTS
Mergers and acquisitions are a recurrent theme for companies in the world of B2B media and events. The wave of private-equity-funded M&A activity that swept through the industry in the 1990s left many companies strapped with debt that had to be refinanced once the recession hit and the bottom fell out of the print-advertising market. But the current cycle of M&A is different in several important aspects, according to Francis J. Friedman, president of Time & Place Strategies Inc., a consulting firm serving the exhibition, event, and association communities. Acquisitions now tend to have more rational valuations, with events at the core of a portfolio of assets developed to create “dominance in a subject area or market niche.” And among the largest players in the field, global expansion through strategic event acquisition is the name of the game, Friedman said, pointing to the U.K. publishing and events company Informa as one example.
Late last year, Informa bought Irving, Texas–based Hanley Wood’s exhibition business for $375 million, adding 17 shows and other events in real estate, design, and construction. Rebranded Informa Exhibitions U.S., the properties complement Informa’s portfolio of shows in similar verticals around the world. As part of the sale agreement, Hanley Wood will continue in its role as the official media and information provider for the purchased events for the next 10 years.
Just last month, MCI, the global meetings and events giant headquartered in Geneva, announced that it had merged with U.S.-based Coulter, an association-services company with management, events, and consulting divisions. With 1,700 employees in 30 countries — in Europe, South America, the Middle East, Africa, and Asia — MCI was ready to break into the United States. Coulter, which is headquartered in McLean, Virginia, with an agency for high-end events in New York City, offered an attractive platform to do that. Both companies shared a similar business philosophy, according to Robin Lokerman, MCI’s group president. “Clients first. What’s good for clients is good for us,” he said. “We have grown around the world thanks to our clients.” Coulter CEO Thomas Coulter Gibson added: “The combination of philosophical and business alignment … created a very natural and very comfortable conversation.”
JEGI’s Mead says that major European strategic buyers like Informa and UBM as well as state-owned operators like Messe Frankfurt and Messe Deutsche will continue to look for strategic acquisitions, particularly in the United States, given the country’s market size and growth prospects. Moreover, in a presentation to Chinese investors and event organizers in Shanghai earlier this year, Mead described B2B global events as a growing, $23-billion market that is highly fragmented — with the top 10 companies in the world accounting for only 20 percent of market share — and ripe for consolidation through M&A. He pointed to the value of China’s many state-of-the-art convention centers, and to the role of events in driving global commerce. “Chinese event operators are well positioned to transform their business models and expand globally,” he said. “Capital is readily available.”
ASSOCIATIONS JUMPING IN
The National Association of Broadcasters (NAB) has built a strong brand over the course of its 90-year history, with its annual convention now drawing more than 100,000 attendees to Las Vegas every spring. “The NAB Show is successful and growing, and it’s the major revenue driver for our association,” said Chris Brown, executive vice president of NAB convention and business operations. “We are seeking ways to diversify our revenue base and to extend our brand equity, and that’s why we’re pursuing strategic acquisitions.”
In November 2013, NAB acquired Content and Communications World and the Satellite Communications Conference & Expo from JD Events. The co-located events, known as CCW+SATCON, are held at New York City’s Javits Center every fall, and offer a non-competitive, regional extension opportunity that complements the NAB Show. “After the first year, we grew the shows by 15 percent,” Brown said, “so with this proof of concept, a great first step, we can go back to our board and look at other [acquisition] opportunities.” He declined to offer specifics, but said NAB is looking at “a couple overseas possibilities” to add to its event portfolio this year.
Another trailblazing association growing through acquisitions is the Healthcare Information and Management Systems Society (HIMSS), whose 52,000 members are involved in optimizing health care using information technology. In recent years HIMSS has acquired database companies that have helped establish HIMSS Analytics as a leading provider of health-care IT business intelligence, and has also purchased media and event companies to build out its content and event platforms. Last year, for example, HIMSS bought out its British events partner, Citadel Events Ltd., an event-management firm that specialized in health IT. Citadel was renamed HIMSS UK, joining dedicated HIMSS business units in North America, Asia, the Middle East, Latin America, and elsewhere in Europe.
Associations like HIMSS and NAB, however, are exceptions rather than the rule. “Not-for-profit organizations are inherently risk-averse,” NAB’s Brown said. “M&A requires putting capital at risk, and typically not a lot of associations have a reserve strong and flexible enough for this kind of growth strategy.” Plus, member-driven boards tend to focus on services other than events, even though events are the major revenue driver for many organizations. “It’s an interesting dynamic — most of the largest trade shows are owned by associations,” Brown said, “but for-profit companies are the ones with the most access to investment capital.”
And that is a growing challenge for associations. “The bottom line is that associations have to start operating more like businesses and become more entrepreneurial,” said Friedman, who later this year will be publishing a book on building the trade show of the future. “Given today’s digital world, in every realm there is competition for community. The historical model where an association can succeed by putting up a moat — those days are over.”
It’s all part of the bigger challenge to the value proposition of associations, according to John Graham, CAE, president and CEO of ASAE: The Center for Association Leadership. “The essence of everything an association does is now fair game for for-profit enterprise, whether it’s events, education, networking, sponsorships, exhibits,” he said. As a result, “associations need to move much more into an engagement model with their communities. They have to engage continuously in their profession or industry, and figure out ways to monetize that engagement.”
EVENT SUPPLIERS EXPAND SERVICES
Not to be outdone, here’s a partial list of M&A activity among event industry suppliers in just the last year:
› Cvent Inc., which provides planners with technology for meeting management, venue sourcing, and mobile apps, acquired Elite Meetings International and its group hotel-sourcing engine, RFP tool, and in-person buyer events.
› Lanyon merged with Active Network Business Solutions, and later in the year acquired Passkey, a leading group-reservation technology platform used by hotels and CVBs. Lanyon now offers meeting planners an integrated platform of tools for managing meetings end-to-end.
› Freeman acquired AVI-SPL, a Florida-based audiovisual company specializing in association shows and business meetings.
› Global Experience Specialists (GES), which itself was purchased by Viad in 1969, bought onPeak and Travel Planners, the two largest event-housing companies in the United States. The company also acquired Blitz Communications, a leading AV company in the U.K. and Europe, and N200, a Netherlands-based event-registration and data-intelligence platform.
› In late February, CCL Industries Inc., a specialty-label and packaging company headquartered in Toronto, acquired Wisconsin-based sister companies pc/nametag Inc. and Meetings Direct LLC for $37 million.
What’s driving these deals? “Last summer, we outlined a new vision and strategy to become the preferred, global, full-service provider for live events,” said Steve Moster, president of GES and president and CEO of Viad. “We knew that event housing would be a critical piece of that goal. Travel Planners and onPeak are leaders in event accommodations. They have the technology, experience, processes, and people to make major contributions to GES and our clients. We want to acquire leading players with products designed to meet the current and future needs of our clients and that also support our core contracting business.”
Dave Weil, vice president of event services for SmithBucklin, one of the world’s largest association-management companies, sees the integration of services among event suppliers as a natural evolution driven by technology. “Registration isn’t about badges anymore, and mobile apps for meetings aren’t just a tool for providing program guides electronically,” he said, adding that integrating services allows for easier collection and analysis of data and intelligence that will help create more meaningful, personalized experiences for attendees and other event participants. “A holistic approach to services makes a lot of sense.”
On the other hand, all this consolidation among suppliers raises a red flag for some meeting professionals. “We’ve seen it before, where too few suppliers in any one sector leads to lack of competitive pricing,” said Carla Merner, CMP, director of meeting services for the Academy of Nutrition and Dietetics. “What is happening to choice in this marketplace? Is there longevity in the cost advantages that might come with scale? These are questions that need to be explored.”
An even bigger question: Do mergers and acquisitions add value? Andrew Ross Sorkin, financial columnist for The New York Times and editor of the newspaper’s DealBook section, pointed out in a December column headlined “The Mergers and Acquisitions Cycle: Buy. Divide. Conquer.” that “the current deal-making boom has been filled with headline-grabbing mergers. At the same time, corporate America is spinning off assets by the truckload.” He went on to note that “mergers have a spotty record of creating value…. Spinoffs and divestitures, however, are usually a much better bet.” The M&A deals that tend to create the most value, Sorkin wrote, are ones that are “executed properly (usually with smaller acquisitions).”
So far, the scale of most M&A activity in the meetings and conventions sector is far, far smaller than the “headline-grabbing” deals of global corporate titans. But the booms and busts of the M&A lifecycle can still apply. While 2014 ended with UBM’s blockbuster buy of Advanstar, it also saw Cygnus Business Media, built on a series of acquisitions over the years, sell off its final group of brands — and its 10 trade shows — to SouthComm Communications.
Even so, Friedman thinks the pace of M&A deals in the events space will continue. “The world is in a global fistfight for strong return on invested capital,” he said. “With our industry offering superior returns on invested capital, we’re going to see M&A momentum continue like a ball rolling downhill.”