Michael Hart

The evil private equity player?
June 26, 2007

At the risk of reviving a slowly dying fire … I feel compelled to add one more word both here and on the op-ed page of the print version of Tradeshow Week to the dust-up created by a column my colleague Heidi Genoist wrote in the June 4 issue.

To me, Genoist’s piece, entitled “Could Investment Reform Exhibitor Costs?” was a rumination on the fact that private equity investors, the kinds that have been scouring the ranks of show management companies for years now, are also taking an increased interest in service contractors. She wondered in print what that might eventually mean to what seems to be the never-ending concern on the part of exhibitors about how much it costs them to exhibit in a tradeshow.

The column provoked one angry letter from Exhibition Services & Contractors Assn. Executive Director Larry Arnaudet (which was printed in the June 18 issue of TSW) and a couple more from other ESCA members to Publisher Adam Schaffer.

It appeared to us at the time that their concern was a reference to “professionalism” in the last sentence of the last paragraph of a 13-paragraph piece, and the belief on the part of some that she was disparaging the work of service contractors.

To me, it seemed like a 90-percent reaction to a 10-percent stimulus. Nevertheless, it all died down after Schaffer sent some of the parties another letter and Genoist blogged a bit here about it.

Then, of course, is when we began to find out what the real concern was. It appears the problem might not have been a perceived insult, but the suggestion that private equity players could be interested in contractors.

I know that all suppliers, both big and small, feel more and more everyday that show managers ask them (no, force them) to give them breaks on price and service that cut closer and closer to the bottom line.

Apparently, many service contractors think this new era, in which they are forced to give up more and more, has been created by the influence of private equity on show management. That view assumes the accompanying belief there was a golden age when contractors and show managers got along beautifully, with everybody making plenty of money – before private investors discovered the business.

Does this really mean that, for instance, an Advanstar show manager is harder to work with than one from Reed Exhibitions? (After all, one is now controlled by private equity, while the other is a publicly traded company.) Or that a show owned by an association (take your pick there) is less demanding than one owned by Hanley Wood?

Or is it possible that the tradeshow business is actually like any other business: The purchaser of a service tries to get the best deal possible, the seller of the service either accepts or rejects the deal, and doesn’t whine about it?

Posted by Michael Hart on June 26, 2007 | Comments (0)