Eyes on Apprise: Charles McCurdy is building a company, one acquisition at a time

Margo McCall -- Tradeshow Week, 9/5/2005

Charles G. McCurdy spent 14 years helping build Primedia, via acquisitions and organic growth, into a $1.5 billion media company. Several months after leaving the company he helped co-found, the one-time Primedia president and interim CEO launched Apprise Media, with $200 million backing from Spectrum Equity Investors.

McCurdy has nailed two acquisitions so far this year: Beckett Media, a Dallas-based producer of sports collectibles and trading cards; and Canon Communications, the Los Angeles producer of 15 tradeshows, 15 magazines and eight Web sites in the medical device and packaging sectors.

And he almost got his hands on a piece of his former company, being identified by some publications as winning bidder of Primedia's business information segment, which produces 25 events and 70 publications. In the end, Wasserstein & Co. got Primedia for $385 million.

In a competitive market, McCurdy continues to be on the lookout for more acquisitions. But don't expect Apprise to turn into the next Primedia, as McCurdy recently told Tradeshow Week Associate Editor Margo McCall. He has his own plans for the company, as well as his own views on the business-to-business media market.

Question: It's been a few months since Apprise bought Canon from Veronis Suhler Stevenson for $200 million. What's your impression of the company?

Answer: The progression and trajectory that Canon Communications has been on, of excellent internal growth, supplemented by selective acquisition growth, has led to something like a tripling of the size of the company between the mid- to late- '90s and 2005.

That same approach to growth — leveraging the market positions the company has as a tradeshow operator and a publisher and increasingly as an online producer — supplemented by selective acquisitions, can continue to deliver exceptional and profitable growth for some time.

Q: You mentioned plans for international expansion when you made the acquisition, specifically the launch of MEDTEC China. Do you still see promise in international expansion?

A: We'll see how the China show goes. It debuts this month. Indications are that we will be on budget and within expectations. Plans for next year's show in China are underway now. The MEDTEC show in Stuttgart (Germany) has been in existence for quite a few years and will continue to grow very nicely. Outside the U.S., the key markets will be Europe, No. 1, and China.

Q: Are you looking for other acquisitions in particular areas?

A: Apprise is looking at acquisitions in a variety of areas. Working with Canon, we're looking to expand its position within the medical device world, the plastics world, sectors in which they have a presence. You're broadening those categories in the U.S., or looking at ways to expand in the same categories in different geographic areas, such as Europe.

Q: At Primedia, you also were involved in a lot of acquisitions. How does the market today compare to the market then?

A: The acquisition market ebbs and flows, and it's flowing right now. There are a lot of opportunities. A lot of people see b-to-b valuations being attractive to the seller, which often tends to increase the supply. I think, selectively, as buyers, there are opportunities to take advantage of that and expand our business base.

Q: Current conventional wisdom is that b-to-b companies want to move out of cyclical, advertising-driven markets. Have you seen that too?

A: A lot of the transaction activity seems to be more driven by financial sponsors, such as the sale of Hanley Wood and Canon; the Primedia business, being a company controlled by (Kohlberg, Kravis, Roberts); Advanstar.

There are some companies like Thomson Corp., which sold its trade publishing group last year. That would have been their point of view — that it's a cyclical business, and they want to be in the data business. Reed talks a lot about orientation to data and non-advertising businesses, but often in the context of working with a base in the publishing arena, which has been quite successful.

Q: When you're considering a potential acquisition, what's most important? The market it's in? The management? Its track record?

A: I'd check the "all of the above" box there. Market position is extremely important, the caliber of the management, the prospects for the business ... and price is the last thing. That's the last consideration.

Q: What do you think about the current multiples? Many recent deals seem up around 12 times operating cash flow now, but when you were trying to divest businesses at Primedia, some of the multiples were as high as 18.

A: Primedia sold some very prominent brands — like Modern Bride, American Baby, Seventeen, New York Magazine — that were very strong publications that, frankly, were worth a whole lot more to the buyers. When Meredith bought American Baby, it made huge sense in the context of Better Homes & Gardens. Seventeen made huge sense in the context of Cosmo (Cosmopolitan). I think those very high multiples were rational on the part of the buyers.

Those 12-times-multiple deals in the b-to-b world that we've seen in the last eight to 12 months tend to be for dominant businesses in attractive markets with excellent prospects. There are smaller businesses that trade for lower multiples because they're more mature or leave their market position or have potentially less effective management.

Q: How do you like running your own company? And how different is it from working for a big corporation?

A: It's similar in that I'm working with an experienced private-equity firm, as I did with KKR and now with Spectrum Equity Investors. It's simpler, in that the private group is now two companies, and Primedia at one point was up to something like 12 operating divisions. I enjoy the lack of complexity. It's easier to execute effectively on a tighter terrain.

Q: What does Michael Behringer, your vice president of business development, bring to the organization?

A: Michael and I worked together for about five years at Primedia. He was an experienced lawyer in M&A and private equity, actually. He'd worked on some startups in Denver, with TCI and interactive on-demand video that was ahead of its time.

He joined Primedia and worked in the development department doing transactions with me for quite a few years, then for years ran a startup operating division, managing the growth of an online real estate business.

He has legal experience, transaction experience and some operating experience. He works with me on identifying, evaluating and concluding acquisitions.

Q: As you make more acquisitions, do you see Apprise becoming about the same size as Primedia was?

A: The plan for Apprise, on a corporate level, is to keep it quite lean, and have most of the responsibilities carried out at the operating company level, such as a Canon.

Q: Will Apprise become the next Primedia?

A: Actually, no. Toward the mid- '90s, Primedia moved to a common holding company model and went public. There were some reasons to do that at the time, having a group of companies under common ownership and control.

The original Primedia model, what was called K-III, was to acquire a handful of promising specialty publishing and niche media businesses, to keep them quite distinct from one another from a capitalization standpoint, (and) operationally from a standpoint of each of these companies, to have management with an ownership stake in their own business. That's the Apprise model we're presenting now.

Q: Can you describe your b-to-b concept?

A: It is very similar to the consumer media concept that we're putting to work. That is to have products with a strong market position, that ideally can develop into multiple roles within a marketplace in print, online and live events, and to coordinate those presences in each niche market to answer as many needs as possible of advertisers and marketers, on the one hand, and purchasers on the other hand.

Q: Have you been to any Canon tradeshows yet?

A: I've been to the Javits show this past June (Medical Design & Manufacturing East; Atlantic Design & Manufacturing; PLASTEC East; EastPack and Automation Technology Expo) and it's a very, very impressive event. There was a good diversity of exhibitors and a lot of buzz in the aisles. People seemed very happy after the event. A new section brought in this year was robotic manufacturing. It was a way to expand on the margin of the show in the markets they're serving.

Q: Do you think tradeshows need to evolve, or is the current model still valid?

A: I'd answer yes to both. The basic concept is extremely valid: presenting one's offerings as an exhibitor to a great variety of interested parties who are attending the show. If the number of buyers gets too few or the number of providers and vendors gets too few, the role of a tradeshow gets reduced. When that happens, an operator needs to find ways to evolve the way they play with the legacy players in the industry, or to find where there's more innovation going on and more diversity among vendors and purchasers.