Guest editor ’ s column

If we assume that all companies have a financial year end of 31 December , then there are at least three potential complications :

1 ) If the company is sold in January 2020 , then it would seem relatively easy to use the 2019 EBITDA ) as the basis for calculating a multiple ( eg . if the EBITDA in 2019 was £ 10m and the price was £ 100m , then the multiple is 10 times ). But well-run exhibition companies are a little odd . Assuming well run rebooks , then by January we know reasonably accurately what the profit for the next year ( in this case 2020 ) will be . So the seller might well argue that the price should reflect the 2020 profits as much as the 2019 profits . This can confuse the multiple .

2 ) If the company is sold in July 2020 – do we take the

Identifiable Trade Show Sales 2010-2019 By Multiple Of Profit Paid profit as being last year ’ s ( 2019 ) or the current year ( 2020 ) or a mixture of the two ?

3 ) Biennials are a particular problem in calculating a normalised EBITDA on which to base a bid for a company – particularly as some are massive , eg DSEi is now the largest show in the UK by revenue . Superficially , just taking one show ’ s profit and dividing by two solves the problem . But it doesn ’ t . Assume the biennial runs in the odd years – 2019 , 2021 . And assume the company is sold in 2020 . Does the buyer take the 2019 Biennial show ’ s profit and divide by 2 , or the 2021 Biennial show ’ s profit and divide that by two ( the 2021 show may already be bigger than the 2019 show ), or is there some subtle blend of the two ? Allowing for all that , it is

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still clearly the case that the price paid for trade show companies rose dramatically between 2010 and 2020 .

So what might happen next ? I hate making predictions , particularly about the future .

The answer is clearly : “ I don ’ t know .” This is compounded by the pandemic . Certainly in the short term profits have fallen and this will ( presumably ) depress the value of exhibition assets .

But one can make the reverse argument quite aggressively . There was much talk of : “ Will trade shows come back ? Is the future digital ?” But the evidence to date suggests very clearly that trade shows ( where they have been able to run unencumbered ) have come

Estimated ( in £ millions )

CloserStill 25 2.9 May-12 8.6X Y BreakBulk 27 3.1 Dec-14 8.6X Neilsen 593 61.0 Jan-13 9.7X Y Advanstar 607 61.0 Oct-14 10.0X George Little 340 34.0 Dec-13 10.0X Y Clarion 215 21.1 Jan-15 10.2X Y Scope 11 1.1 Jul-10 10.2X World Events Group 16 1.5 Dec-10 10.3X International Business 51 4.8 Jul-11 10.6X Hanley Wood 237 21.0 Dec-14 11.3X Ascential IPO 1,182 101.9 Feb-16 11.6X Clarion 600 52.2 Jul-17 11.7X Y Ascential / Spring Fair 300 26.1 May-18 11.7X Eventa 211 17.6 Apr-16 11.9X Comexposium 501 41.6 Mar-15 12.0X Y CloserStill 127 10.7 Mar-15 12.0X Y Pennwell 231 19.2 Apr-18 12.1X Y Global Sources 291 22.9 Aug-17 12.7X Y Emerald IPO 1,611 117.6 Apr-17 13.7X Y Tarsus 632 45.5 Sep-19 14.1X Y Allworld 373 26.1 Jan-17 14.3X UBM 4,380 300.0 Jan-18 14.6X Mack-Brooks 200 13.5 Jan-19 15.4X CloserStill 340 21.3 Dec-18 16.1X Y

PE Involved back very strongly indeed . If we can assume that by 2024 trade shows will be able to run pretty much as they were in 2019 , then the argument reverses itself . The argument becomes : “ Throw anything you like at trade shows – even international pandemics which bring travel and social interaction to a total halt for two years – they will survive it and come back strong . They are a truly resilient asset .”

But how does that affect value ? Will multiples go higher ? This is a tough one .

Would you have invested in stocks in January 2020 ? Assume someone asked you the following question on 1 January 2020 : “ There is about to be an international pandemic which is going to close down the world for at least 18 months . Travel will fall by 90 %. It is likely 10 million people will die worldwide . We have no vaccine with which to fight this virus . Economies will decline by 20 % and government debt will rise to over 100 % of GDP in all major economies . Would you now put your money into stocks and shares ?”

Most of us would surely have answered : “ No way .”

And what happened ? The broad world market indices rose 46 % in those two years – so £ 10,000 invested in stocks and shares on 1 January 2020 was worth £ 14,600 by 31 December 2021 .

That is why I would not predict what happens next . On the positive side , PE is sitting on a wall of money and it has to be spent somewhere . The number of attractive

18 — March