Ownership Changes: Meet the New Boss

By Margo McCall -- Tradeshow Week, 8/15/2005

So you work for a show producer that's recently been scooped up by a private-equity firm. Should you be worried?

Many mergers are pursued so that the buyer can take advantage of what's known in the financial business as "synergies." And while acquirers view those duplication-eliminating savings as a positive, employees might not be as upbeat about losing their jobs, enduring department budget cuts or being made dizzy by rampant changes in the org chart.

Luckily, the financial players that are bankrolling recent show company acquisitions seem to be more interested in long-term growth and keeping organizations intact than in making wholesale changes.

"The smart financial buyers try real hard to keep management intact, especially if they're not buying a troubled company," said David Cheifetz, managing partner of the Compass Group Intl. "The fact that management is staying puts a different spin on things."

And in the case of Canon Communications, F&W Publications, Hanley Wood and Questex Media Group, the companies are simply replacing one private-equity owner with another. Tellingly, the buyers are, for the most part, sticking with existing teams.

Apprise Media CEO Charles McCurdy, who is backed by Spectrum Equity Investors, hasn't yet made any major changes at Canon Communications, the Los Angeles-based producer of 15 tradeshows and 15 magazines that he purchased for $200 million in April.

The fact that McCurdy was willing to retain management was a key factor in owner Veronis Suhler Stevenson selecting Apprise as the winning bidder. As part of the arrangement, William Cobert, a stakeholder, stayed on as Canon's president and CEO.

J.P. Morgan Partners' $650 million purchase of VSS' Hanley Wood — a deal that closed earlier this month — also called for retaining most of its management. Although founder Michael Wood stepped down as CEO, he remains a board member. Frank Anton, formerly president, moved into the CEO slot. But the heads of Hanley Wood's five divisions, including Hanley Wood Exhibitions President Galen Poss, stayed in their positions.

Existing management also stayed on when Questex Media, a new company backed by the Audax Group, in March acquired five divisions of Advanstar Communications, backed by DLJ Merchant Bankers. Kerry Gumas, a longtime Advanstar executive vice president, became Questex's CEO, while Audax's Tom Caridi, a Reed Exhibitions veteran, took the position of executive vice president and CFO.

Questex retained the operating unit leaders, as well as most of the 400 Advanstar employees involved in running the 50 Web sites, 25 conferences, 23 magazines and 20 tradeshows acquired for $185 million. The main change for some of those employees was moving out of Advanstar office space and into new Questex digs.

Boston-based private-equity firm ABRY Partners has no extreme makeover planned for F&W Publications, which produces 60 magazines, 28 Web sites, 13 book clubs, 12, consumer show brands and 11 book imprints. The biggest change was hiring David Steward, formerly of Martha Stewart, People and TV Guide, to become F&W's new CEO.

"I wouldn't anticipate there would be any big changes at the company," said Peggy Koenig, a partner at ABRY, which also holds a stake in Cygnus Business Media. "We're very happy with the conference and tradeshow division, and hope they would continue operating as they are. If it's not broken, don't fix it."

Steward, who took his post at the Cincinnati-based company just last week, said his emphasis will be growth, whether organic or by acquisition. "Our focus on the company is coming in and helping it to grow," said Steward. "F&W is focused on building special interest franchises across platforms. One of those platforms is definitely shows."

London-based Incisive Media has opted to retain existing staff for one year as part of its $43 million acquisition of Jupitermedia's Search Engine Strategies Conference & Expo and ClickZ Web sites.

TBA Global Events has stressed that employees and management were a big part of why it bought event manager PGI.

Cheifetz said the fact that some show management companies are being transferred from one private-equity firm to another should ease the transitions. That contrasts with the last merger wave a decade ago. Back then, private-equity firms were acquiring tradeshow companies from founding entrepreneurs.

Because private-equity firms chart growth plans and exit strategies from the outset — keeping their investments for terms of five to seven years — they tend to manage their businesses differently. "All these financial buyers have an exit strategy, because they have to generate returns for investors. I think that causes them difficulty when there's a downturn," Cheifetz said.

In contrast, he said, strategic players, such as dmg world media, Reed Exhibitions and VNU Expositions, can afford to ride out the economic storms.

Financial players have typically been willing to pay higher prices for acquisitions. In the late '90s, some acquirers overpaid for properties, which put them in a difficult position when the economy suddenly ground to a halt.

"If the economy continues to go well, these are going to prove to be great investments. If it doesn't go well, we're going to have the same round of problems," Cheifetz said.