ES. Please share your experience in the exhibitions and events sector that gives you a unique perspective on the industry.
Steve. I was lucky enough to be in a senior position at the Blenheim Group from 1989 through to the sale of the business in 1996. During this period, the company went from being a small UK organiser to the world’s largest organiser almost purely by acquisition. My partner at Mayfield Merger Strategies is Anna John who also previously worked in an entrepreneurial exhibition organiser, ITE Group (now Hyve). This previous experience and the fact that we represent many independent organisers as well as being in constant communication with the major players allows us to have a broad global insight into the sector. We’ve been running Mayfield for more than 20 years and over that time have helped many entrepreneurs sell their businesses to many of the world’s leading organisers.
THE MOST SUCCESSFUL BUSINESS MERGERS/ACQUISITIONS ARE THOSE THAT ARE
STRATEGIC BUT ALSO COMPLEMENTARY.
ES. How do you identify prospects for a merger or acquisition?
Steve. Most independent organisers sell at some stage. We see our job as making sure that they sell at the right time in their cycle. Entrepreneurs want to maximise every bit of growth and keep it for themselves but it’s important to leave some growth for the buyer – that way the sale price can be maximised. We look for businesses with strong ties to, and a great relationship with, their community as these are the businesses that will grow – and successful acquisitions are all about historic and future growth.
ES. Do you think COVID-19 could lead to boom time for M&As in the event industry?
Steve. We’ve had an M&A boom time for the last few years with record numbers of transactions and many new buyers (such as Private Equity firms) coming into the market. The last year – from March 2020- has seen a sharp decline in the number of transactions and most of those that have taken place have been COVID related. I don’t expect a sudden rush of deals happening immediately – buyers need to see more visibility of future earnings and sellers don’t want to sell at the bottom of the market. But the M&A market will be back.
ES. What are your thoughts on how this pandemic has disrupted exhibition industry?
Steve. The effects are too numerous to cover here. Most exhibition organisers have been able to hold on to exhibitor money and roll it into the postponed edition of their shows as well as being able to create some digital revenue to cover their overheads. On the other hand, the vast network of support companies that provide services to the organisers and exhibitors have seen their income dry up completely so it has been particularly tough for them financially. On a positive note, many organisers have been pleasantly surprised at the traction they have gained on digital revenue. This is an area that has always had potential but which a lot of organisers have been dismissive of. Now that they have been forced to concentrate on this, they see the uplift that it could bring to their business as another income stream alongside the physical exhibition. This can be classed as ultimately beneficial disruption.
ES. How do you see Asia’s/India’s mergers & acquisitions market?
Steve. When organisers talk about Asia from an M&A perspective they usually think about China first, then South East Asia and then India. China remains fertile ground for acquisitions by western organisers and almost every independent organiser in China has been approached for acquisition. South East Asia is restricted by the lack of independent organisers that have scale – most businesses tend to be small, so the potential isn’t great. The exception to this is Indonesia where there is a high proportion of good, long standing, privately owned organisers who don’t seem interested in working with international organisers. India has always punched below its weight – the majority of the acquisitions are made by the German Messes who seem less frightened of the market than most. I think India and its opportunities are often misunderstood and it has also suffered in the past from the lack of large modern venues that allow shows to grow to their potential. This will change as new venue developments come on stream.
ES. How M&A transactions will re-start, do you think that the deals will have a different flavour with more emphasis on partnerships and longer earn-out periods for acquisitions to allow the businesses to grow back to 2019 levels?
Steve. Slowly at first! I think that the pandemic has delayed transactions by up to two years as it will take businesses up to 2022 or even 2023 to get back to their 2019 levels of profitability. Buyers are less keen on paying significant amounts of money upfront but more open to longer earnouts to allow the business to get back to its previous levels of profitability. I don’t think that there will be more emphasis on partnerships as the deal structures are usually driven by the sellers and, as entrepreneurs, most don’t want to join larger organisers on a long term basis.
ES. What is your take on ‘Consolidation has been a prominent and recurring theme in the B2B events sector?’
Steve. There are many strands to the sector – publicly owned organisers such as Reed and Informa, Private equity owned (including Clarion and Tarsus), Venue owned organisers, Associations owned shows and independent organisers. Consolidation where larger organisers acquire independents has been with us for many years and is a normal part of business. There are a steady stream of start-ups which then sell out and the process starts again – rather like a food chain. Private Equity exits tend to be purely financial transactions with one PE firm selling to another – Clarion has been through this many times. The real consolidation examples are actually quite few – Informa acquiring UBM is obviously the largest and Rimini and Vincenza Fiera merging through IEG is another example.
There has been regular speculation around whether RELX will decide to sell their exhibition division and this has been heightened by the performance of their exhibitions business through the pandemic relative to the rest of the group. If Informa were to buy it this would be the ultimate consolidation – number one and two organisers in the world joining together – and with largely complementary portfolios – would fit together very well.
ES. According to you, what are the three successful business merger examples and the factors that contributed to their success in the exhibition industry?
Steve. The most successful business mergers/acquisitions are those that are strategic but also complementary. Mergers of businesses that are competitive only result in the rationalisation of shows and cost savings through overhead/staff reduction. Neither of these are good for either the exhibitions themselves or the people running them. UBM’s acquisition of All World is a great example of this – strategic for UBM in terms of geography and complementary in terms of product. Informa’s acquisition of UBM was also largely complementary especially for their Asia business and brought more firepower but in a way that augmented rather than threatened the business. Going back several years I would say that the acquisition of Labelex by Tarsus is a stand out example of a successful deal. It was the deal that Tarsus was founded on and the Label series is still the bedrock of the company. Since acquiring this more than 20 years ago, Tarsus has been able to give the community of exhibitors want they want by launching in all the countries that exhibitors want to expand their own businesses into.
ES. What would be the emerging trends in M&A activities, in 2021?
Steve. We will continue to see Association owned shows – primarily in the USA where there is a high proportion of these – either being sold to, or partnering with, traditional exhibition organisers.
- There will be several non-core disposals from the larger organisers. Disruption tends to focus attention on marginal parts of the portfolio especially when redundancy programmes have depleted resources.
- The revelation that organisers can earn substantial high margin revenues from digital activities will start to attract data companies into the sector via acquisition.
- “Normal” M&A transactions will slowly re-start but deals will have a different flavour with more emphasis on longer earn-out periods for acquisitions to allow the businesses to grow back to 2019 levels.
ES. What would be your message to the exhibition industry?
Steve. We, as an industry have proved how resilient we are. Having been through the pandemic and survived. we can go forward armed with what we have learnt to make our businesses even stronger than before. Face to face is not going away – digital and technology are assets to enhance our offering and not a threat.
