M&A Activity Update: Pace of Deals Remains Brisk
By Rachel Wimberly -- Tradeshow Week, 7/16/2007
The first quarter of 2007 ended with a bang — with Veronis Suhler Stevenson buying business-to-business media firm Advanstar for $4 billion. The second quarter didn't have nearly as substantial a single deal, but the sheer number of them has increased compared with previous quarters — totaling 20, as tracked by Tradeshow Week.
"There's still a very healthy market in tradeshows and events," said Richard Mead, managing director at Jordan Edmiston Group Inc.
JEGI's first-half M&A overview of the media and information industries reported 38 deals between January and June with a value of $515 million. During the same period in 2006, there were 26 deals valued at $642 million.
Mead said even though the overall deal value dipped, the industry was still on track to beat last year's numbers. "(We) have a number of deals in the pipeline that will close by year end," he added.
The second quarter of 2007 was marked by numerous international deals, including Reed Exhibitions' joint venture with Alcantra Machado, the biggest tradeshow organizer in Brazil with 26 shows, and Expomedia's acquisition of Russian IT and telecom conference company Exposystems.
Roland DeSilva, managing partner of DeSilva+Phillips, said, "Most everyone is diversifying internationally. There's not as much available in the U.S., but it's strong internationally."
Nick Curci, president of Corporate Solutions, disagreed that there weren't deals to be made in the United States. "There are many in the works, and you will see many sale announcements this third quarter with deals of all sizes," he said.
Curci's company represented dmg world media in the divestiture of all six of its U.S.-based home and garden shows over the last several months with the last two, Scottsdale Home & Garden Show and Phoenix Home Improvement & Garden Show, going May 8 to Show Technology Productions of San Antonio.
"They (dmg) were very happy with the results, and they have reallocated internal resources to focus on their largest and most profitable events," Curci said.
Other significant deals in the second quarter involved suppliers buying other suppliers: Freeman's acquisition of ProActive, a Chicago-based face-to-face marketing firm; exhibit design company Elevation Exhibits' purchase of another exhibit design company, INOEE Exhibits; and contractors Champion Nationwide Contractors and George E. Fern Company together buying a Florida-based contractor, The Audie Group.
Beyond international and supplier mergers and acquisitions, the second quarter ended with show organizer Access Intelligence buying another show organizer, The TradeFair Group. Both companies focus on the energy sector and, after scooping up tradeshows Electric Power, Clean Gulf, Clean Atlantic, Clean Pacific, and Industrial Fire, Safety, and Security, along with POWER magazine, AI has an even stronger position in the sector.
Curci predicts the M&A market will remain brisk through the end of the year if the following favorable market conditions continue:
- positive equity markets
- long-term interest rates at historic low levels
- mid-term interest rates, such as the 10-year note, under 5.3 percent
- private equity funds continuing to chase quality deals
- strategic companies realizing the benefits of acquiring their smaller competitors
- no significant terrorism attacks on U.S. soil
- market multiples at high, but reasonable, levels
But, Curci warned, any of these factors turning negative could quickly "turn the M&A market around and put a damper on the activity."
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