Consumer Shows Draw Investors

Rollup opportunities seen in acquiring and growing mom-and-pop events

By Margo McCall -- Tradeshow Week, 7/25/2005

Tradeshows are proving popular buys in the red-hot merger-and-acquisition market. Now investors are taking a look at consumer shows too.

The June purchase of F&W Publications by ABRY Partners, the Boston-based private-equity firm that backs Cygnus Business Media, was an initial sign that financial players are starting to dip their toes in the consumer show waters.

Public shows' investment potential was also a hot topic of discussion at the recent Natl. Assn. of Consumer Shows gathering in New Orleans. "That was the buzz," said NACS President Jim Fricke. "It's something we've all seen. The interest is definitely growing."

Tom Gaither was at NACS to seek out opportunities for Affinity Group, the Ventura, Calif., owner of Camping World stores, the Good Sam Club and several magazines in the recreational vehicle sector. But Gaither, the company's vice president of consumer shows, wasn't just looking for any event. "We're looking for people who offer shows that fit in with what we do," he said.

Gaither is an RV industry veteran who joined Affinity Group in January to help with the company's acquisition strategy, which is based on the assumption that its vast databases can be used to drive attendee traffic. He said Affinity acquired a Minneapolis RV show in February and two ice fishing shows last year, and has other deals in the pipeline.

Edward Koller III, formerly of Jordan Edmiston Group Inc., was at the NACS show on behalf of Action Media, a producer of youth-oriented events. Like the Affinity Group, Action Media is also only looking for shows in specific areas.

Besides its biggest brand, the 20-city tour of Hot Import Nights for car-tuning enthusiasts, Action Media produces two Northern California ski and snowboard shows, the Natl. Houseboat Expo held in Louisville, Ky., and RCX Expo, an event for remote-controlled vehicle aficionados, held at the Anaheim Convention Center. Action Media also plans to launch a consumer video game show in Anaheim next October.

"We're always looking around for properties close to our space. We're not looking to run out and do any kind of consumer show," said CFO Brett Zane.

Tradeshow industry veteran Nick Curci, president of merger advisor Corporate Solutions, said the interest in consumer shows is unprecedented. "For the first time ever, there's more than just a couple of buyers out there in the consumer show marketplace," he said. "It's boding well for would-be sellers."

Consumer show ownership patterns are similar to those in the tradeshow industry decades ago, according to Curci. "In the '80s, with tradeshows, there were a couple of the real big guys and hundreds and hundreds of family-owned shows," he said, adding that consumer shows are "ripe for a rollup strategy for lots of different buyers."

But investors shouldn't expect aggregating shows to be a simple task. "It's not an easy trick to pull," warned Michael Franks, COO of dmg world media, the most active strategic acquirer of consumer shows. "There are more moving parts, so there's a higher risk."

Investors should realize that it's typically more difficult — and expensive — to draw attendees to consumer shows than tradeshows. "You're not only selling space to exhibitors, but you have to market to attendees. You don't have names and addresses. With tradeshows, you have a database, and know exactly who you're sending out to," he said.

It can also be a problem if the entrepreneurial founders don't come along with the acquisition, leaving a staff starved for leadership and unaccustomed to sophisticated business processes. The loss of an established show's founders can mean the loss of long-term venue relationships.

Acquirers should bear in mind that consumer shows are generally locally based, meaning that the show manager must know local newspaper editorial and ad reps, as well as often belong to local organizations.

"You have to understand how to reach that marketplace, what type of billboard works," Franks said.

Dmg has bought more than a dozen businesses in the past three years: three in 2003, six in 2004 and five so far in 2005. Although Franks said dmg is still "full bore acquiring things," the company is also devoting attention to making sure its corporate values and vision are spread to the acquired companies.

But before a consumer show owner puts up the For Sale sign, he or she should remember one thing: Consumer shows typically command much lower multiples than their higher-value tradeshow brethren.

Franks said that, whereas a tradeshow might be sold for six to nine times operating cash flow, a consumer show would only fetch four to six times operating cash flow. Curci agreed with that assessment, but stressed that the valuation depends on the property's size and quality.

Zane said Action Media, for instance, would pay a premium for a company with a 20-percent growth rate and no competition, but far less for a firm with a 10-percent growth rate and a swarm of competitors.

Among recent acquirers, Canadian newspaper publisher Osprey Media Income Fund said its purchase of Town Media just happened to include the Ontario Garden Show, Gourmet Food & Wine Show, Ontario Builders' Forum and Better Living Home Show, along with a handful of magazines.

"We're serving advertisers. If we can broaden our base, we will," said John Leader, Osprey's vice president of finance. "We're open to opportunities. We are expanding our portfolio of products."

Patrick Buchen, however, knew exactly what he was after when he purchased VISIONS: The Women's Expo from newspaper publisher and TV station owner Belo several months ago and formed Adjuvant Expos. As general manager at Belo Expositions, Buchen put in a bid for VISIONS after learning that the division was going to be shuttered.

Buchen, Adjuvant CEO, plans to spiff up VISIONS by giving it a new look and working with exhibitors on their displays. Buchen's company is also under contract to provide a fitness expo in Dallas and the Dallas and Houston marathons.

An industry veteran, he agreed with Curci's assessment that consumer shows hold great opportunity. "I see the consumer industry paralleling where the tradeshow industry was at 12 to 15 years ago. You've got a host of large organizations that have gobbled up most of the tradeshows. I see the consumer shows, for the right investor, doing the same thing."