The trade show and conferences industry is experiencing a surge in mergers and acquisitions, driven by continued strong growth and high profitability in the sector, according to a new study, “The Events Industry: The Opportunity for Sustained Growth.”
The study by media investment bank DeSilva+Phillips and AMR International, an M&A consultancy, projects an international growth rate for the events market of 5.5% through 2011.
“There is a demand for events right across the board,” Denzil Rankine, CEO of AMR International, said at a conference Sept. 4 in New York to announce the findings. He noted that U.S. growth of the events industry is projected at 4.2% through 2011, with similar performances expected in most of Europe.
“There are very strong profit opportunities within the trade show sector, and the fundamentals look solid for the next five years,” Rankine said. “Events are a very strong "old media' market.”
The Middle East and China are expected to see the most robust growth through 2011—20% and 15.1%, respectively, according to the study. “Many companies will be salivating, looking at the growth rates in these markets,” Rankine said.
If there is any drag on the current enthusiasm for acquisitions, it's the tight credit market, combined with general pessimism about the economy, said Reed Phillips, managing partner of DeSilva+Phillips.
There were 26 acquisitions of events companies in the first half of this year, compared with 36 deals during all of last year.
Rankine attributed the quickening M&A pace to the industry's tendency to attract exhibitors that return to a venue—80% to 90% repeat business is not uncommon, he said—plus strong cash flow and profit margins that typically run up to 40%.
Given the industry's growth rate and strong economic fundamentals, sellers are commanding purchase prices representing historic multiples of both event revenue and profitability, Phillips said.
The most popular acquisitions involve b-to-b media companies with strong skills in both events and publishing, according to the study. Prime examples include VNU (now Nielsen Co.), which was acquired by a private equity consortium in 2006 for $11.1 billion, and Advanstar, bought last year by an investment group led by Veronis Suhler Stevenson for $1.1 billion. M