First Half 2006: Deal-making at Fever Pitch

By Rachelle Crum -- Tradeshow Week, 8/7/2006

Despite rising interest rates, the first half of the year for the industry's mergers and acquisition market was one of the busiest periods in the last few years. The number of exhibition and conference deals in the first half was up nearly 30 percent over 2005's first half, according to the Jordan, Edmiston Group Inc.

May and June brought in the largest media deals of the period, including Valcon Acquisitions' $11 billion purchase of VNU and Canon Communications' purchase of eight manufacturing tradeshows from Reed Exhibitions.

Although there is some question that the Federal Reserve will pause in its interest rate hike cycle, many don't expect the M&A market to cool down any time soon. Private equity funds continue to grow, and more properties, including Penton Media and several dmg world media consumer shows, are on the block. Reportedly, Cygnus Business Media and Ziff Davis Media are also looking for a buyer.

Industry veteran Bob Krakoff, chairman and CEO of Boston-based investment firm Blantyre Partners, said the M&A trend established in the first half "seems to be continuing." The deals, he said, created "a little bit of a herd mentality" and "will continue to bring other people to test the waters."

Nick Curci, president of Westport, Conn.-based M&A advisory firm Corporate Solutions, agreed that the year's second half would likely be as active as the first, "if not more."

"Buyers are being very active," Curci said. "They're looking for quality properties, and there are quite a number of them available."

Adam Gross, vice president of marketing for New York-based JEGI, is optimistic about the second half for several reasons, among them a healthy mix of buyers still looking for properties and a strong industry. A possible halt in Fed interest rate hikes would "only help to ensure the debt markets remain strong," he said.

"The debt-lending environment is very strong right now, and there is a competitive private equity market that has extraordinary purchasing power," Gross added.

In the first half, JEGI alone completed 18 media transactions (including the Canon acquisition of Reed Exhibitions shows), up from nine during the same period a year ago. In July, just as the second half began, JEGI closed two deals, including the sale of Commonwealth Business Media to United Business Media for $152 million.

During the first half, Corporate Solutions brokered AGI Events' purchase of Plus Events; AmComm Holdings' sale of its two Speechtek Conferences and Expositions; and Kelly Simon Productions' sale of the Pennsylvania Law Enforcement & Security Expo, New York Law Enforcement & Security Expo and West Virginia Law Enforcement & Security Expo to E.J. Krause & Associates.

Corporate Solutions is also handling the sale (announced May 31) of six dmg world media U.S. consumer home shows, which has produced "a surprising turnout" of buyer bids, Curci said. "It was an overwhelming response."

Curci said the sale — expected within the next few weeks — is likely to go to one buyer, "although we have received literally dozens of offers for the individual events."

Krakoff said he expected the sales of Penton and Cygnus to "most likely" close in the second half.