Up for Sale: Companies on Auction Block
By Margo McCall -- Tradeshow Week, 4/11/2005
Two years after rumors began circulating that Hanley Wood was for sale, officials are finally confirming that the Veronis Suhler Stevenson-owned company is on the block. Furthermore, one of VSS' other tradeshow holdings, Canon Communications, is reportedly up for sale too.
According to sources, the private-equity firm could raise as much as $700 million from their sale. Hanley Wood, comprised of 22 magazines and 15 tradeshows in the building and construction sector, could fetch $500 million, which would represent a multiple of 10 times operating cash flow.
"Hanley Wood is for sale," Galen Poss, president of the exhibition unit, said recently. "The entire senior management team has committed to go forward with the new buyer, if that's the preference of the buyer."
Founded in 1976 by Mike Hanley and Mike Wood, the company generates more than $180 million in annual revenue. VSS bought Hanley Wood in 1999 for an undisclosed price. A year later, the exhibitions unit was formed.
The fact that the company is publicly admitting that it's for sale after two years of rumors could be a signal that VSS hasn't been able to find a buyer through traditional channels, said Robert Crosland, managing director of AdMedia Partners.
Canon Communications, meanwhile, operates 14 magazines and 15 tradeshows in the medical device sector, including its East and West coast Medical Design & Manufacturing shows, which both rank in the Tradeshow Week 200. VSS, through its VS&A Communication Partners fund, purchased the company in 1996.
VS&A Communication Partners funds also back Access Intelligence, which was created by the merger of PBI Media, and Chemical Week and Chemical Engineering magazines; and Ascend Media, which recently completed a string of medical acquisitions and is also backed by JP Morgan Partners.
According to The Deal, a magazine that covers the merger-and-acquisition business, VSS has started circulating books for Hanley Wood and Canon as part of an auction process. Among companies that were reportedly evaluating the VSS holdings: ABRY Partners, a private-equity firm that backs Cygnus Business Media and Penton Media; Advanstar Communications, a producer of 39 tradeshows backed by DLJ Merchant Banking Partners; McGraw-Hill, which owns a number of aviation and energy tradeshows; and VNU, whose expositions unit produces about 50 tradeshows. Citigroup Venture Capital, Investcorp, Thomas H. Lee Partners and Warburg Pincus also reportedly were expected to evaluate one or both of the properties.
The companies were tight-lipped, as expected. "If we were (considering it), I wouldn't be able to tell you," said Marc Merrill, a spokesman for Advanstar.
During Advanstar's recent earnings call, CEO Joe Loggia said the company was "in the process of pursuing several acquisitions in what we've identified as key market areas." It's unlikely that he was referring to Canon or Hanley Wood, since he said the purchases could mostly be funded by $41 million currently on Advanstar's balance sheet. But that was before the company generated $185 million cash from the sale of its Information Technology and Communications, Travel and Hospitality, Beauty, Home Entertainment, Abilities and Portfolio units. That divestiture will raise Advanstar's acquisition war chest to more than $200 million.
Former Advanstar Chairman Bob Krakoff - now chairman and CEO of investment firm Blantyre Partners - has also been mentioned as a possible suitor. But Krakoff, who was among the numerous bidders for Thomson Media, recently said he wasn't interested in Hanley Wood.
Poss, meanwhile, is optimistic about Hanley Wood Exhibitions' prospects for growth, regardless of who owns it. "When Veronis Suhler Stevenson acquired Hanley Wood five years ago, there really wasn't an exhibition unit. We see the future being very bright. Business will probably double over the next five years," he said.
