Advanstar Sells Five of Its Divisions
By Margo McCall -- Tradeshow Week, 4/11/2005
Advanstar Communications will be a much smaller company with the $185 million sale of five of its business groups. But according to President and CEO Joe Loggia, it will also be a much more focused one.
The cash sale of its Information Technology and Communications, Travel and Hospitality, Beauty, Home Entertainment and Portfolio groups to a newly formed entity called Questex Media Group, will leave Advanstar with Fashion, License, Motor Vehicle, Healthcare, Science and Pharmaceutical groups.
Questex is backed by the Audax Group, a 6-year-old private-equity firm. Kerry Gumas, who was vice president and general manager of Advanstar's Information Technology and Communications group, will serve as Questex's president and CEO.
"I'm very excited," said Gumas, who attracted financial partners and put together a management team when he became aware of the divestment opportunity. "It's been a very, very collaborative process, in terms of putting the whole deal together."
The sale of the groups will leave the company with 48 publications, 32 tradeshows, 23 conferences, seven directories and two electronic products. Previously, Advanstar produced 77 magazines, 54 tradeshows, 40 conferences, 19 directories and seven electronic products.
Loggia said paring down the business-to-business company's operating groups was an outgrowth of a company strategy to focus more closely on customers, in keeping with the new mission statement: "connecting our customers with theirs."
"It was really us sitting down and creating two companies out of one," said Loggia.
Deciding which units to shed wasn't easy. Loggia, who became CEO slightly more than a year ago, said the sectors' prospects, in addition to Advanstar's position in those markets, were determining factors.
As an indication of earning power, the six groups being retained generated $275 million revenue in 2004, compared with $100 million for the groups being sold.
Among the events being retained are: Dealernews Intl. Powersports Dealer Expo Licensing Intl and MAGIC Marketplace. Among those being sold are AIIM ON DEMAND, the Intl. Beauty Show New York and the Luxury Travel Expo.
Loggia said placing Gumas at the helm of the new company will provide continuity for both customers and its 400 employees. "Rather than take the business, package it, and put it out for sale and run an auction, we created a transaction that would have minimal disruption to the business," he said.
As part of the agreement, Advanstar will transfer an operating platform to Questex and temporarily provide it with support services and office facilities. The deal is expected to close at the end of this month.
Loggia acknowledged that now was a good time for the sale, which took several months to put together. He declined to state the deal's valuation, but said, "We received a very fair price for both buyer and seller."
