The Platform Builders: Firms Feed Funds to Ex-execs

By Margo McCall -- Tradeshow Week, 2/14/2005

In the entrepreneurial tradeshow industry, it's not uncommon for high-ranking executives to branch out in order to build — and later sell — their own companies. It's just rare for so many to emerge at once.

Pick almost any major media company and it's likely to have spawned a former executive with big-money backing who's interested in acquiring the platform of events, magazines and related enterprises on which to build his next business-to-business empire.

The list includes former Primedia executives Dan Altman, Cameron Bishop and Ron Wall; Advanstar Communications and Cahners Business Information veteran Kevin Condon; former Advanstar CEO and Chairman Bob Krakoff; onetime Primedia CEO Charles McCurdy; former Times Mirror head Efram "Skip" Zimbalist III; and a host of others.

Nick Curci, president of Corporate Solutions, said it makes sense for executive heavyweights to secure funding, then try to build businesses for their investors. However, he agreed that there seem to be more of these players in the market than ever before. "They're all very capable and very smart people. Hopefully, they will be the next wave of people who build things up and sell them," he said.

With so much private-equity money floating around, getting financial backing is the easy part. Far more difficult in today's competitive acquisition environment is closing in on the properties on which to base the new companies.

Thomson's auction last fall of Thomson Media, a producer of financial magazines and 18 related conferences and exhibitions, underscores the current feeding frenzy. A half-dozen or so parties submitted bids — including Krakoff and McCurdy — with the winner's $350 million bid some $100 million above what officials thought the company would fetch.

"Banks are very eager to lend money to well-known financial sponsors and management teams," said Blantyre Partners Chairman and CEO Krakoff, whose bid was backed by Citicorp Venture Capital.

Krakoff, who spent decades in the tradeshow industry, sees more change in the types of players than in the level of competition. "It is competitive. It always was. Historically, it's been the strategic companies, and now they're joined in the arena by a good number of very well-financed and pretty experienced management teams that are involved in the bidding process."

Rather than seeking acquisitions in a particular sector, Krakoff said he looks for companies with strong cash flows. "It's really quality that's more important than the sector. If you have a leading tradeshow, you're pretty well going to make money over time," he said.

Ascend Media, formed in 2002 by Altman, Bishop and Wall, has recently celebrated a string of acquisitions. Backed by JP Morgan Partners and Veronis Suhler Stevenson, Ascend in mid-December bought Medical World Communications from Great Hill Partners, its owner since 1993. The 350-employee company, based in Jamesburg, N.J., produces 50 B-to-B health care magazines, as well as continuing medical education events.

The same month, Ascend completed its acquisition of Exhibitor Visibility World, which produces exhibit guides and show programs for medical events.

And in November, Ascend purchased SynerMed Communications, a 45-employee organizer of continuing medical education conferences based in Califon, N.J. With the three additions, Ascend now generates $150 million in annual revenue, according to the company.

Bishop said there's no secret to Ascend's success. "We have a defined strategy and business plan. We've just gone about executing that plan," he said.

Although he closed three transactions in two months, Bishop cautioned that company officials had been working on one of those deals for a year and another for 18 months.

Condon, meanwhile, drew $100 million back in 1999 from Chicago private-equity firm GTCR Golden Rauner, but couldn't find a suitable acquisition. Recently, AdMedia Partners Managing Director Bob Crosland steered Condon toward Alta Communications, a Boston private-equity firm that has invested more than $1.5 billion in more than 100 media companies.

For Condon, the wait was over. Alta last September funded Proximus B2B's acquisition of Retail Systems Alert Group, a Boston-area company that produces Retail Systems/VICS Collaborative Commerce, a 90,000 net square foot tradeshow that draws about 300 exhibitors and 4,000 attendees to Chicago's McCormick Place each spring. Condon said a new event called MIX, short for Merchandising Innovation & Xcellence, will be launched alongside Retail Systems this year.

"We were looking for something that could serve as a platform. It took a while to get the deal done, but we kept at it," he said.

Condon said he's now hopeful he can nail another one. "Deal flow is beginning to pick up. Some sellers are waiting for the economy to get better before putting something on market. Some have decided it's good enough," he said.

The executives' ability to secure acquisitions often depends on whether their financial backers are willing to pay market prices. "If backers are squeamish about paying top dollar, it's going to be difficult to get a deal done," said Crosland.

With seasoned media executives indispensable to fresh private-equity firms just investing in the space, the symbiotic relationship is likely to continue. "They need CEOs to partner with," said Reed Phillips, managing director for media banker DeSilva & Phillips.

And the time it takes some to close a deal isn't all that unusual. After all, Phillips said, it often takes established companies just as long, but the delays just aren't as apparent.

"It always takes a while for acquisitions. If you're working with a private-equity firm and don't own a business and are looking for one, it's more obvious," he said.