NEWS
THE DEALMAKER
As large mergers and acquisitions continue to make
headlines, Steve Monnington takes a moment to reflect on the
unprecedented wave of deals in 2018
T
10
here were three deals announced in
the last few days of 2018. CloserStill
Media swopped private equity
partners, with Inflexion selling to Providence
Private Equity for an enterprise value of
£340m. Providence is CloserStill’s fourth PE
partner since its inception.
Reed broke its acquisition silence with
a joint venture with Shanghai Forever
Exhibitions, organiser of the Automotive
Manufacturing Technology and Material
show, China’s leading automotive engineering
exhibition. Industry sources say that the
multiple was in excess of 13x EBIT which
seems to be the expected multiple from
most organisers in China these days. Reed
also started the new year in style with the
acquisition of Mack Brooks, one of the few
remaining long-term family-owned businesses
in a deal that has echoes of the UBM
acquisition of AllWorld at the end of 2016.
ITE Group is investing further in the
education sector with a $1m investment in
Learnit, a new event for global learning which
will take place in the same week as Bett, which
was acquired by ITE as part of the £300m
Ascential Exhibitions acquisition made in May
2018.
These final acquisitions brought the total
number of announced transactions in 2018
to 87, the highest number since we started
tracking deal activity in 2010. There were
also 53 different purchasers, which was a
new high. The value of transactions was at its
highest in 2018 thanks to the Informa/UBM
deal. The trends over the last five years are
shown below.
As well as the number of buyers
increasing, the type
of buyer has also
changed. Back in
2012, the two
main buyers
were Reed and
UBM. Adding in
Informa for consistency
– now that it owns
UBM – between
them they acquired
25 businesses,
February 2019 | exhibitionnews.co.uk
which represented 36 per cent of the total
transactions. In 2018 the comparative number
was 11, which was 13.5 per cent of the total.
In contrast, the main private equity-
owned organisers – Clarion, CloserStill,
Comexposium and Emerald (which is still 65
per cent owned by Onex, despite being publicly
quoted) – made no acquisitions in 2012 and
peaked at 19 in 2017 (28 per cent) when
they were in full acquisition mode, although
this dropped to nine in 2018 as Clarion and
Comexposium started to concentrate on larger
deals.
There has also been a significant change in
the geographical make up of acquisitions. Five
years ago, the internationalisation of emerging
markets was in full swing with private
companies in Turkey, Brazil, Mexico, China
and South East Asia being snapped up by the
international organisers. Now, the emerging
market activity has quietened down partly
because of economic conditions in countries
such as Brazil and Turkey and partly because
there are very few good businesses to buy in
those markets. In 2018, the majority of the
transactions were in the UK and USA.
At the beginning of 2018, in my future
outlook for Exhibition World magazine
I wrote: “There is a combination of
circumstances making 2018 the year to sell.
A lot of committed buyers, relatively strong
economic conditions in the world’s major
economies, even ahead of the uncertainties
around Brexit, and good growth in most
exhibitions generally making it one of the
preferred sectors for investment.
What remains is for
entrepreneurs to take
advantage of this
and make that life-
changing money.”
This is exactly
what has
happened,
and there are a few
key drivers behind
the doubling of the
number of UK and
USA transactions
from 2014 to 2018 and
why this trend is likely to continue.
• Multiples have been at a high, originally
driven by the competition amongst the
private equity-backed businesses for follow-
on acquisitions as they seek to deploy
capital. With exit multiples for companies
such as Comexposium and CloserStill up
in the 14x and 15x range, PE can afford
to buy small businesses at high single digit
multiples – what we call multiple arbitrage.
• Although PE-backed acquisitions fell off in
2018, there are a number of private equity
firms intent on entering the exhibition sector
with serious amounts of capital to spend. We
saw an example of this in December with
Phoenix Equity (which originally invested in
CloserStill and sold it to Inflexion) buying
Nineteen Events.
• There are a lot of entrepreneurs who,
over the last five years, have left the larger
organisers to set up their own businesses.
The large number of buyers and high
multiples mean that many are considering
selling earlier than usual. We are seeing
several businesses coming to market that
were set up three or four years ago.
The key transactions in 2018 were:
• The acquisition of UBM by Informa for
approximately £4bn, with the combined
business leapfrogging Reed to become the
world’s largest organiser.
• ITE’s acquisition of the Ascential
Exhibitions for £300m, which required a
share rights issue to fund it.
• The acquisition of the NEC by Blackstone
for approximately £810m.
• The acquisition of Pennwell by Clarion
for $300m, which was followed by 100
redundancies at Pennwell’s head office and
speculation that its publishing business will
be sold.
• The changes in PE ownership of CloserStill
Media (from Inflexion to Providence) and
Questex (from Shamrock to Mid Ocean)
In terms of outlook for 2019, here are
some things that I expect to happen:
• There will be continuing offloading of non-
core exhibitions from some of the larger