But in the past year at least three PE firms have borrowed money from the markets directly without that money being linked to any particular asset purchase or deal . They have each borrowed sums north of $ 1bn secured on their own business – not on any particular company which they own or deal they might do in the future . They have been able to borrow at around 3 %. The benefit is obvious . Next time they buy a trade show company , instead of paying an outside bank 6 % on ( say ) $ 300m of borrowings , they lend the money to themselves , but at 3 %. In a single year on that deal they save 3 % ( 6 % minus 3 %) – which is $ 9m a year . Simples . That ’ s not peanuts .
How more and more is being paid for assets by pe Around 2004 PE paid , on average , 7.4 times profits for a business . By 2020 , this had almost doubled – to an average of 13.17 times profits for a business . This is for any and all businesses , not just trade show companies .
In part this general trend line is due to interest rates continuing to fall ( thus making borrowing money to buy the asset cheaper ). But it is more a function of the sheer wall of money . As we have seen in our other charts , in 2004 PE had some $ 400bn in dry powder to spend . By 2021 this had
“ It is very unlikely that many of our larger exhibition companies and venues could have grown the way they have , and employed the number of people they have , had they not had access to the phenomena of venture
reached $ 2,200bn . From 2008 onwards governments have been pouring money into the western economies to try to support them after the financial crash and , more recently , the pandemic . That money has to go somewhere .
I could produce very similar graphs of all sorts of other assets – artwork , Ferraris , wine , bitcoin , and obviously housing ( house prices in
2500
2000
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capital and PE .”
500
0
Florida have risen 45 % in just two years ). The trend lines are all very similar and reflect the wall of money .
What has happened to the value of exhibition assets in the past 10 years ? In the period 2010 to around 2014 , Trade Show companies sold for around 10 times their EBITDA ( without getting too technical , EBITDA is annual profit before interest and depreciation ). Before the crash in 2008 , multiples of eight and nine were common .
After 2014 prices ( and hence perceived values ) started rising fast , going from around 10 times to 15 or even 16 times by 2019 . It is important to stress that this is not because the buyers were acquiring completely different companies . As you can see from the table 0n page 18 , Clarion features twice , as does Emerald and the exhibition assets of Ascential . CloserStill appears three times – at 8.3X in 2012 , 12X in 2015 and 16X in 2018 . The 16 times estimated profits paid for CloserStill is the highest price paid for any company which can be analysed . It is also , strangely , the case that CloserStill was sold for both the lowest multiple in this period ( 2012 ) and the highest ( 2018 ).
In previous generations , the highest published multiple for a significant business was probably for Blenheim in 1996 – an estimated 13.4 times profits .
How do we calculate these multiples ? This is not as simple as it seems .
I have included the deals in the last decade where sufficient information exists for a reasonable stab at the multiple to be made . In the case of publicly quoted companies like UBM , Reed or Informa this information is usually in the public domain . Most PE companies do tell their own investors what they are spending , but some of the assumptions are inevitably based on what is available and which may not be complete .
Annual Spend On Private Equity Deals ( Blue Line ) And Cash Available ( Red ) ( RED ) TO PRIVATE To Private EQUITY Equity Companies COMPANIES To Spend TO SPEND ( Dry Powder ( DRY POWDER ) ($ Billions )($ ) Billions )
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 GLOBAL CAPITAL AVAILABLE AND SPENT 1995 TO 2021 $ BILLIONS ( FT and McKINSEY ) SPENT GLOBAL CAPITAL AVAILABLE AND SPENT 1995 TO 2021 $ BILLIONS ( FT and McKINSEY ) AVAILABLE
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