Advanstar Communications confirmed it is "exploring strategic alternatives, including a possible sale of the company."
Advanstar has retained the investment banking group at Credit Suisse First Boston to assist in this effort. A CSFB private equity fund is the principal owner of Advanstar, which operates 57 expositions and conferences, publishes 55 magazines and directories, and has 75 electronic publications and Web sites.
"The combination of our improved financial performance, strong growth prospects and an active M&A market, have resulted in increased interest in Advanstar within the investment community," Joe Loggia, Advanstar president-CEO, said in a statement.
DLJ Merchant Banking Partners, which is now owned by CSFB, acquired Advanstar for $900 million in 2000 from private equity firm Hellman & Friedman. Industry observers said CSFB would be lucky to break even on a deal for Advanstar, even with the exceptionally strong M&A market. CSFB sold Advanstar’s technology and travel units for $185 million in May to Questex Media Group.
Said to be interested in the remaining assets of Advanstar is Robert Krakoff, who is the former chairman-CEO of the company and whose Blantyre Partners is backed by the Blackstone Group. Also reportedly interested are Apprise Media, backed by Spectrum Equity Partners, ABRY Partners and Warburg Pincus, according to the Post.
"On the one hand, it’s surprising that they haven’t refocused their energy on building on the rest of the portfolio," said Richard Mead, managing director at media investment bank Jordan, Edmiston Group. "On the other hand, it is a very strong market at the moment, and it makes sense to explore the market at this stage."
It is unclear how the remaining piece of Advanstar will be valued. Estimates place the EBITDA (earnings before interest, taxes, depreciation and amortization) for the Questex piece of Advanstar at $18 million for 2004. That would mean that the remaining assets of Advanstar, which include the MAGIC fashion industry trade shows, generated EBITDA of about $73.5 million in 2004. This means Advanstar could fetch $735 million in a deal that would value the company at a 10-times EBITDA multiple.
If Advanstar were to be sold, it will likely be to a private equity fund, industry observers say. If so, Advanstar has made the rounds of private equity funds, starting with Goldman Sachs in 1992 and moving to Hellman & Friedman in 1995 and CSFB in 2000.
Another banker said the move indicated a change of plans for CSFB. "I think they are losing patience and confidence regarding the IPO option," said Robert Crosland, managing director at media investment bank AdMedia Partners.
In addition to the Advanstar-Questex deal, the second quarter of 2005 saw the closing of several b-to-b media transactions:
- A consortium led by JPMorgan Partners acquired Hanley Wood from Veronis Suhler Stevenson for $650 million.
- Mansueto Ventures acquired Inc. and Fast Company from Gruner+Jahr for $35 million.
- Aspire Media, backed by Spectrum Equity Partners, acquired Canon Communications from VSS for $200 million.
- Wicks Medical Information, which is affiliated with Wicks Group of Cos., acquired Jobson Publishing for $105 million from Boston Ventures.
A handful of media investment banks have released figures in the past week quantifying the vigor of the b-to-b media M&A market, which is said to be driven by renewed strength in b-to-b marketing, the continued involvement in the sector of private equity money and historically high leverage multiples.
Best M&A market in a decade
Roland DeSilva, managing partner of media investment bank DeSilva & Phillips, said, "2005 has been the best M&A market for magazines/events in more than a decade." DeSilva & Phillips calculated that the value of media and information industry transactions rose 290% in the first half to $2.76 billion, from $707 million in last year’s first half.
There were 266 deals completed in this year’s first half, an increase of 15.2% over the same period in 2004, according to a report by Jordan, Edmiston Group. The value of the deals skyrocketed, climbing 181.1% to $26.7 billion.
The number of b-to-b magazine deals increased by 44.4% in this year’s first half to 26; the value of these deals climbed 58.1% to $1.7 billion.
M&A activity in exhibitions and conferences showed similar robust growth as the number of deals increased 36.4% to 15 and the value of the deals rose 256.5% to $1.8 billion.