Small Deals Dominate The Landscape in Q3
By Rachel Wimberly -- Tradeshow Week, 10/19/2009
For the past year or so, the tradeshow industry’s mergers and acquisitions market, like most other aspects of the economy, has taken a beating. Deals have slowed to a trickle, and deal values have gone from the billions to the mere millions.
According to the Jordan, Edmiston Group, Inc.’s Third Quarter M&A Overview, there were 29 deals tracked since the beginning of the year, with a value of $140 million, compared with 40 deals tracked in the same period last year, with a value of $712 million.
Richard Mead, JEGI’s managing director, said in the overall business-to-business M&A market there were several substantial deals in the third quarter, including Adobe’s $1.8 billion acquisition of Omniture and eBay’s $1.9 billion sale of Skype.
On the other hand, he added, “The tradeshow sector has not yet seen its own share of larger transactions. M&A in the tradeshow sector has been driven by the acquisition of one-off events that fit squarely into existing portfolios, such as Clarion Events’ acquisition of the Counter Terror Expo and United Business Media’s acquisition of the China Intl. Optoelectronic Expo.”
Mead also said the busiest deal maker in the third quarter was dmg world media, which steadily has sold off its non-core assets in the past year.
Dmg made four deals in the third quarter:
- San Francisco Intl. Gift Fair and The Seattle Gift Show to Urban Expositions
- the majority of its Redhill, U.K.-based trade publishing and event business to Quartz Business Media
- Ideal Home Show to Media10
- Portland Gift & Accessories Show to Western Exhibitors
Mike Iannelli, managing director of Lincoln Intl., said, even with the deals that did take place in the third quarter, the M&A market isn’t in turn-around mode just yet.
“The M&A market overall is bottoming out as buyers and sellers further adjust to the weaker economy and lower valuations, while the financial systems shows further signs of stabilization,” he added. “A lot of the activity that is happening is more of the distressed variety where lenders are putting pressure on owners to sell depressed assets to recover loan value.”
It might not sound like it, but, Iannelli said, “this is actually a positive, because in the first half of the year, there was a view that buyers did not exist for these assets, even at very low valuations due to the significant uncertainty in the markets and the economy.”
Nick Curci, president of Corporate Solutions, said most of the recent deals have been a result of restructuring or liquidation, not because of the “tremendous financial performance of these properties.”
He added two types of deals are occurring right now: ones that involve events that are growing, which he said are near impossible to find, or fire-sale deals to acquire events and magazines for relatively low prices compared with what they might have been worth even just a year ago.
“The M&A market has not turned around at all,” Curci said.
Even though the market’s been at a standstill for a while, Mead said, “The credit markets are starting to loosen, and debt financing is certainly available for transactions of quality businesses – those with growth and profitability.”
He added JEGI is in discussions with prospective sellers that could indicate a busy 2010 for M&A.
However, Iannelli said the overall economy has to improve before any significant transactions are made.
“Tradeshows and events tend to lag into and out of economic cycles, as does marketing spending generally, due in part to the lead times associated with budgeting for and staging events,” he added.
Curci said some things need to occur before the market truly starts to recover: Banks have to begin lending again, media companies have to start showing positive quarterly gains in sales and profits, unemployment has to recover to a rate less than 10 percent, consumers have to start buying again and business travel has to pick back up.
Mead said the economy has begun to stabilize and start growing again. “The big question is: What will the pace of recovery be?” he added. “Our sense is that, with unemployment still high and consumers reluctant to ramp up their spending, the return to a robust economy will be a gradual, protracted process.”
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