Informa Exhibitions CEO Charlie McCurdy believes that mega-deals will be scarce on the horizon for the exhibitions space in 2019.
Are there more mega-deals on the horizon for the exhibitions space in 2019? I doubt it.
If a ‘mega-deal’ is defined as a transaction valued at more than, say, US$500m, there just aren’t that many exhibition organisers of scale out there. Of the top ten organisers in the world, four are Messen and not in the conceivable transaction pool.
So, beyond Informa and Reed - Comexposium has recently transacted, Clarion has been building, and ITE and GL seem solid in their positions. The merchandise to make a mega-deal just isn’t available.
What’s the point of acquiring, anyway? Acquisitions need to be justified by improved performance. How will the markets served by the acquired company benefit? How can acquiring a company consequently promise profitable growth in the future? Those are essential questions.
And they’re the essential questions for ‘mega-deals’ as well as the sort of tactical, bolt-on acquisitions that will carry on in any deal environment as they always have, complementing organic growth. There’s always a supply of such deals, as entrepreneurs cash out or companies re-prioritise, and it’s a great way to reinforce an exhibitions portfolio.
That isn’t to say that deal-making in our industry is going away. History has shown that a period of increased consolidation is often followed by tapering of deals. But that’s OK, too. Deal-making is not so much about getting big, as it is about getting better – creating value by having greater commercial impact on the markets that our exhibitions support.
What, in any case, are the benefits of scale? It needs to be very granular. For example, where an organiser establishes comprehensive multi-regional reach within a niche vertical market sector; or multi-vertical reach within a defined geographic sector. A larger enterprise has opportunities to apply these benefits to multiple verticals and multiple geographies in a coordinated way.
Perhaps it’s good for our industry to spend some time now improving our capabilities as organisers or market-makers. Organic growth over time does create more intrinsic value thanM&A growth, after all.
In sum, deals should be driven by the opportunity to create value, both for ourselves as show organisers and for our customers.
A pull-back in deal activity provides valuable opportunities to focus more on investing on internal talent while identifying ways to address the needs of supplier communities in core niche markets, whether vertically or geographically.
So, with or without deals, we seek to create value in the marketplace for the suppliers who rely on our shows and the buy-side who look to us in so many ways.
Ultimately, our focus has to be on growing the value of the enterprise itself. But to do that we need to help grow the value of our customers’ enterprises. And that’s what answers the central question in deal-making…what gives the buyer the right to own and operate a business that happens to be available at that moment to buy?