It’s been a busy year for M&A in events. The year started out steady with 12 deals in the first half. Then we saw 10 deals each month from July to September. We’re seeing that buyers are interested in high-growth niche sectors – in market-leading events.
They are also increasingly investing in industries adjacent to their existing portfolios. Buyers are building broader ecosystems and taking advantage of complementary customers. It’s a simple and organic way to make acquisitions more profitable.
Lastly, we’re seeing two other trends take hold. First, luxury experiential events aimed at affluent enthusiast communities are in high demand. Second, cross-border deals are increasingly common as buyers are expanding globally.
While there is strong appetite for quality assets, buyers have become increasingly rigorous and detail-oriented during due diligence.
We’ve observed several pitfalls in the sales process that sellers have to navigate in today’s market to maintain buyer confidence throughout the process.
The first pitfall: Poor data
A critical factor in event M&A is the quality and organisation status of a company’s data. Buyers expect sellers to have clear, consistent records of their sponsors/exhibitors, attendees and revenues – ideally in a consolidated database. Without this, it is difficult to assess customer retention, performance and drivers of growth, making accurate valuation difficult. As buyers are spending more time in due diligence, data quality has become a key determinant of deal success. This data is also a source of future growth opportunities for a buyer. Sellers will benefit from getting their data organised before they enter a sales process.
The second pitfall: Not meeting growth expectations
As buyers are increasingly focused on growth and willing to pay a premium for it, one of the most common setbacks in event M&A transactions is when a business fails to meet growth expectations – specifically projections. This can come about one of two ways: either due to overly optimistic projections by the seller or by general market realities.
Regardless of the reason, the gap between projected and actual results erodes buyer confidence and leads to valuation disputes. Sellers should err on the side of being conservative when projecting. They should also monitor their sales consistently and have a narrative around why expectations were not met. This is where having a professional advisor is invaluable – someone who will own the sales process so the seller can continue to focus on running the business.
The third pitfall: Lack of financial clarity
Many organisers don’t have a clear view of profitability at the individual event level. Sometimes costs are shared across multiple shows or venues, sometimes not. Handshake deals such as venue partnerships, revenue splits or bartered services are often not properly reflected in the P&L. This makes it difficult to determine true profitability.
Having financials organised before the sales process begins with accurate event-level accounting. Transparent cost allocations will greatly help move due diligence along. A lack of clarity on this front can raise concerns about reporting accuracy of the event or business in general.
It’s a ongoing process
Preparing to sell your business or event(s) is a process. By taking the time now to organise and avoid these pitfalls, sellers will be able to move due diligence along at a faster pace.
Grimes, McGovern & Associates is a leading lower middle-market Mergers & Acquisitions firm advising media, events and information services businesses globally. See our transactions here.
