Show Mergers Strong

Increased 2005 activity forecast as sidelined sellers, buyers return

By Margo McCall -- Tradeshow Week, 1/17/2005

The valuation of tradeshow mergers and acquisitions increased nearly eightfold in 2004 — more by far than any other media sector — thanks largely to Bain Capital taking a $400-million stake in M¦C Communications.

According to Jordan Edmiston Group Inc.'s tracking, 23 exhibition and conference deals worth a total of $921 million were finalized in 2004, up from 18 deals worth $108 million in 2003. While the number of deals increased by about 28 percent, the valuation of those deals rose by 753 percent year over year.

The stepped-up M&A activity in the tradeshow sector has been helped by improvement in overall economic conditions, as well as exhibitors' and attendees' gradual return to tradeshows. The pickup in activity comes after the number of deals in 2003 plunged by nearly half from the 33 acquisitions inked in 2002.

"Now there's a greater sense of confidence in the market. Certainly the economy picking up is going to help the tradeshow industry. Tradeshow numbers are starting to come back. Those who've weathered the storm are coming back," JEGI Vice President Adam Gross said.

Dmg world media's four deals made the company the year's most active buyer. Hanley Wood, funded by Veronis Suhler Stevenson, finalized two acquisitions, while Ascend Media, Bain, Cygnus Expositions, Freeman, GES Exposition Services, McGraw-Hill's Platts division, Reed Exhibitions and Thomson each made one acquisition.

Tradeshows remained the eighth most active among the 11 media and information industry categories JEGI tracks. Even though Bain's acquisition of M¦C was large by tradeshow industry standards, it was not among the year's 10 largest media deals, which ranged from $519 million to $2.5 billion in value.

Overall, the 465 media deals in 2004 were worth $30.8 billion, compared with $16.1 billion for the 301 media mergers finalized in 2003.

"The deal value overall was stronger," said Gross. "More legitimate properties are coming onto the market. The trend really bodes well for the next couple of years. It does seem that the real attractive properties have been sitting on the sidelines."

Among dmg's acquisitions were the Canadian Intl. Farm Equipment Show, Gastech/European Autumn Gas Conference, Outdoor Adventure Shows and San Diego Interior Design and Landscape Expo.

Hanley Wood picked up the Natl. Roofing Contractors Assn. annual meeting and Stonexpo, while Reed expanded its industrial holdings with the purchase of the Advanced Manufacturing & Productivity Exposition series. GES bought Canadian service contractor Pro Show Services, Freeman bought Independent Electric and JD Events bought ShowBiz Expo.

Gross said acquisition activity in 2005 should pick up for show services, in addition to show managers. Besides the business-to-business companies that are typically the buyers, 2005 should see higher interest from private-equity firms too. "The private-equity sector is loaded with cash and willing to pay a premium. There are a number of private-equity firms interested in investing in the tradeshow space," Gross said.

In addition, he said, JEGI has been seeing increased interest in consumer shows. However, it will be the regional groups of shows that command the most interest, rather than the local mom-and-pop-owned shows that dominate the consumer market.