Steve Monnington of Mayfield Merger Strategies sees a positive surge in M&A activity for the start of the year and provides some pointers for organisers looking to sell.
After the relatively fallow years of 2020 and 2021 where M&A activity was about 50% of the normal level, the number of reported transactions increased from 40 in 2021 to 54 in 2022 with the number of buyers increasing from 27 to 36 over the same period. This is still well below historic levels, due to a combination of almost no deals in China and low activity across South East Asia and the need for potential sellers to get back to at least 2019 levels of profitability before going to market.
2023 has started strongly with seven transactions reported so far and with China re-opening we can expect to see a return to M&A there as well. In addition to this, the number of inbound enquiries at Mayfield-towers, has also jumped significantly. January is always a busy month for entrepreneurs asking for advice on whether to sell or not as they re-assess their priorities for the coming year. This January has been particularly busy and we have found ourselves regularly advising entrepreneurs not to try and sell their business now.
Don’t try and sell too early
Several of our calls have been from businesses that have run only one or two editions of their event and one was for a business that has yet to run the launch edition. We’ve only ever sold two businesses after the first event – World Future Energy Summit to Reed in 2008 and Counter Terror Expo to Clarion in 2009 – and both had unique characteristics that made this possible.
In general, buyers need to see a track record with consistent growth for the event. This means a minimum of three editions in order to show both proof of concept and to establish the event so that it’s clear that it has loyalty and is the market leading event for the sector and geography in which it operates.
Mayfield has handled nine transactions since the market reopened post Covid and every one of these were businesses that have been developed over several years. Open Room Events, the 1-2-1 business that we sold to CloserStill Media in January, started life in 2004. The first edition of Northern Restaurant and Bar, acquired by Diversified Communications at the end of 2022, was in 2000. Both businesses have been painstakingly built by the owners over the years [read more about NRB p21].
What buyers look for today is quality of data and depth of relationships with the sector’s community. The business modeI that monetises this, whether it’s an exhibition, conference, confex, summit or 1-2-1 is the end result of this development work, not the starting point. In order to achieve a decent valuation for a business, the founders need to have had time to create both genuine intellectual property and deep relationships with the key players in the sector. Otherwise, there is no reason for someone to buy it. Too early stage, and buyers who have experience in the sector would rather launch than acquire.
What’s been happening so far in 2023?
The biggest news came in a trading update by Ascential along with the results of their strategic review. Now that their events business, primarily Cannes Lions and Money 2020 are back to a full schedule, the strategic plan is to sell off WGSN, their trend forecasting business and then split the rest of the business into a US listed company that will own the digital commerce business with the remaining business, Ascential Events, continuing under a UK plc listing. The sale of Retail Week and World Retail Congress to William Reed just prior to the announcement cleared out smaller events that could be a distraction.
The announcement has created a buzz among private equity firms who have viewed Lions and Money 2020 as prime events to own and, although the overall re-organisation will take some time and needs shareholder approval, Ascential should be inundated with PE interest as an alternative to continuing along the plc route.
This column appears in the Spring 2023 edition of Exhibition News.
