VSS, which is being joined in the deal by co-sponsors Citigroup Private Equity and New York Life Partners, agreed last month 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 later this month or in early June.
"The acquisition gives us access to additional capital to go out on the acquisition front," said Joe Loggia, CEO of Advanstar, who plans to stay on after the deal is completed.
Loggia said Advanstar will be looking for media properties in its three core markets—fashion and apparel, life sciences and power sports—as well as other areas that are growing.
"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."
Advanstar's portfolio currently 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.
The life sciences division targets the health care, dental, veterinary, pharmaceutical, science and drug discovery markets.
"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."
Another person familiar with the transaction, who requested anonymity, said Advanstar would be an aggressive suitor after spending the past 18 months more or less on the sidelines.
After Advanstar pulled itself out of an auction process in December 2005, the company was in a "limbo state," the source said. "There were not a lot of organic investments and no substantial acquisitions."
The source said VSS is "resetting both the finances for Advanstar and … the time horizon to sell the company within five years, plus or minus a couple of years."
The source added that the deal is a strong 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 to focus on its core markets.