JPMorgan Buys Hanley Wood
Investment group pays $650 million for VSS construction property
By Margo McCall -- Tradeshow Week, 6/6/2005
The winning bidder for Veronis Suhler Stevenson's Hanley Wood was JPMorgan Partners with its $650 million offer to purchase the producer of construction-related magazines, Web sites and tradeshows.
The acquisition was touted as the biggest business-to-business media buy since DLJ Merchant Partners bought Advanstar for $900 million in 2000.
The long-awaited sale of Hanley Wood — for nearly 13 times operating cash flow — comes a month after VSS secured more than $200 million for the Los Angeles-based Canon Communications, a provider of tradeshows and magazines in the medical device sector. The Hanley Wood sale would have been finalized sooner were there not a collapse in the debt market on the day final bids were accepted.
"It's taken a while, but it was a good outcome," said Christopher Russell, VSS managing director. "There was lots of interest expressed from lots of buyers."
Private-equity firm Wasserstein was among the investors, as was Hanley Wood's founder Mike Wood, President Frank Anton and its division heads. Wood will move from CEO to board member and Anton will become CEO when the transaction closes. All five division heads, including Hanley Wood Exhibitions President Galen Poss, will retain their positions.
"It's the A-team," said Russell.
Richard Mead, managing director of Jordan Edmiston Group Inc., credits the management team with helping boost the sales price. "JPMorgan has picked up a very attractive asset. In large measure, the reason they got the price they did is because of the team they're taking on board," he said.
While competitors serving less healthy sectors have floundered in recent years, Hanley Wood's prospects have remained bright. With annual revenue of about $200 million, the Washington, D.C.-based company produces 22 magazines, 17 Web sites and 15 tradeshows.
But some worry that construction industry growth could stall. "We're at the peak of peaks right now," said Bob Crosland, managing director of AdMedia Partners. "There's so much downside in the construction industry. There's a lot of talk of a bubble."
Hanley Wood, meanwhile, has a five-year plan to double the size of its existing business, with company officials forecasting continued acquisitions of construction-industry magazines, tradeshows and data products.
Russell said some strategic players participated in the auction, but were less aggressive than the financial players. Most of the financial players were known media investors. However, at least one had construction-industry, rather than media-industry, experience.
JPMorgan Partners is a co-investor, with VSS, in Ascend Media, a B-to-B company focusing on the tradeshow and medical sectors.
Hanley Wood was launched as a custom publisher in 1976 by Wood and partner Michael Hanley. Its first magazine, Builder, was acquired in 1981. It wasn't until the 1998 acquisition of masonry and concrete tradeshow producer the Aberdeen Group that Hanley Wood branched into events.
The following year, Hanley Wood was sold to VSS, which in 2000 established an exhibitions division with the intent of making the firm a major player within two years.
VSS last year was the fifth-biggest producer of Tradeshow Week 200 shows. Although the sale of Hanley Wood and Canon will put VSS out of the tradeshow business for now, the firm is still interested in the industry.
"We're still big fans of the B-to-B space, and we're big fans of the tradeshow space," said Russell. "There's a lot happening right now in terms of deal flow. Right this minute, it's pretty competitive."
One more big transaction remains on the horizon: Primedia's Business Information division, a producer of 70 publications, more than 100 Web sites and 25 events.
Mead said the Hanley Wood sale shows that B-to-B properties are still viewed as attractive. "It sets a good tone that there's value in tradeshows and magazines and databases," he said.
