Steve Monnington, managing director of Mayfield Media Strategies, contextualises a spate of mergers and acquisitions in the global exhibition market.
Private equity is playing an ever-increasing role in exhibition M&A activity. In the last year we have seen Providence Equity acquire Clarion Events, Inflexion acquire CloserStill Media, Charterhouse Capital Partners acquire 50% of Comexposium and Living Bridge acquire Upper Street Events. During the summer there were several press reports that Top Right Group were considering either an IPO or a sale and, if a sale turns out to be the preferred route, the form book suggests that private equity will top any trade bids.
Many had expected that Top Right Group subsidiary, i2i exhibitions would be sold off separately from the trade publisher. However, if it is a straight choice between IPO and sale then of course it is cleaner for owners APAX and Guardian Media Group to look for a disposal of the whole business. Once i2i is sold, it is hard to see what other exhibition groups there are for private equity to get their teeth into, but this won’t diminish the level of interest. Considering the key exhibition investment parameters - resilience, positive cash flow, fragmented ownership and geo-cloning opportunities it is not surprising that so many PE firms are still trying to find a way in.
The private equity case is based on growth, and the fastest way to grow is by making bolt-on acquisitions. This quarter’s acquisition activity shows this secondary
Acquisitions and partnerships this quarter effect with both Comexposium and Clarion is very active. In the case of Clarion this was directly by the acquisition of Urban Expositions and then subsequent acquisitions made by Urban themselves – but they are all financed by Private Equity funds.
Renaud Hamaide, CEO of Comexposium, explains [in EW, issue 4 2015] how private equity outbid potential trade buyers in his sale process. He also expresses his fear that now they have embarked on a program of follow- on acquisitions, the price expectations of sellers could increase because their instinct is that private equity will be prepared to pay more.
Whilst acquisition multiples have been increasing, it’s not obvious that private equity backed organisers are responsible for driving up prices. In China, there is a strong element of “face” in acquisition negotiation – sellers don’t want to appear weak to their peers and this is pushing up price expectations, although there have been a few recent examples of deals falling apart because trade buyers are not prepared to overpay.
Private equity involvement in the exhibition sector is here to stay and, whether you consider that to be good or bad, without their funding we wouldn’t have this level of globalisation. Comexposium’s Hamaide predicts that in three to five years time, they will increase their overseas business from 5% to 35% and we have seen a transformation in the global activity of Clarion and other private equity-backed organisers over the years.
