After Advanstar pulled itself out of an auction process in December 2005, the company was in a "limbo state," according to a person familiar with the deal, who requested anonymity. "There were not a lot of organic investments and no substantial acquisitions."
But that was then. The latest deal "provides an opportunity for [CEO] Joe [Loggia] and his team to both invest in acquisitions and grow Advanstar's core markets" in fashion and apparel, life sciences and power sports, the source said.
The source added that VSS is "resetting both the finances for Advanstar and is [also] resetting the time horizon to sell the company within five years, plus or minus a couple of years."
VSS, which is being joined in the deal by co-sponsors Citigroup Private Equity and New York Life Partners, agreed last week to buy Advanstar from private equity fund DLJ Merchant Banking Partners III, an affiliate of Credit Suisse that acquired Advanstar for $900 million in 2000. The deal is expected to close in late May or early June.
"The acquisition gives us access to additional capital to go out on the acquisition front," said Loggia, adding that he will be staying on after the deal is completed. He said Advanstar will be looking for media properties in its three core markets as well as areas that are "growing and the dynamics are conducive to change."
Advanstar's portfolio includes 60 publications and directories, 47 international and regional trade shows and 95 Web publications and Web sites. It is best known as the producer of MAGIC Marketplace, a trade show for the global apparel market, and Dealer Expo, the largest U.S. trade show in the power sports aftermarket. Its trade titles include Dental Products Report, Drug Topics DVM Newsmagazine, Medical Economics and Motor Age.
"Of course, we're going to take management's lead, but we want to be flexible in how we grow Advanstar's three verticals," said Chris Russell, a managing director at VSS who worked on the deal. "We'll grow organically and through acquisition, but it will be different for each of the three portfolios."
The source who requested anonymity said the deal is another indication that the overriding trend in b-to-b media is "to have more substantial positions in fewer served markets, rather than vice versa."
In 2005 DLJ Merchant Banking Partners III sold Advanstar's technology and travel units for $185 million to Questex Media Group in order to focus on its core markets. "The [VSS] deal reflects that b-to-b media is a healthy industry and is not going away," Loggia said. "There are some very good businesses within the market, and it's a very effective way for industries to communicate and market."