Dealmakers
world of exhibitions revolves around PE is much truer today than it was five years ago and will be truer still in two years ’ time .
what trends I expected to see in 2022 . If ever something was designed to dampen the enthusiasm of private equity for investing in a business , it would surely be something that effectively shuts the business down for at least 18 months with no ensuing revenue and where subsequent revenues were unlikely to recover to 2019 levels until 2022 or even later . However , I have been surprised and encouraged by private equity ’ s response to Covid-19 , continuing to fully support the companies they have invested in and quickly resuming their acquisition activity and , when Dan asked me about one likely trend for 2022 , I found myself saying “ 2022 will be all about PE ”.
Much as I hate agreeing with Phil Soar , he has a bird ’ s eye view through his chairmanships of CloserStill Media , currently owned by Providence , and Nineteen Group , currently owned by Phoenix Equity . His contention that the
“ All this activity raises the question of whether there are enough highquality exhibitions available to feed collective appetites ...”
Cashflow characteristics PE investment has only been able to operate in the exhibition sector because of the fragmented ownership of exhibitions and the constant stream of entrepreneurs who create them . It is this , together with the positive cashflow characteristics that has attracted PE interest . In addition , the relatively short time horizons for PE investment ( initial investment to exit ) have moved the business of exhibitions well beyond the mere organisation of shows into a financial exercise for the PE firm , the management team of the company they own and the entrepreneurs who create and then sell their businesses to them .
More acquisitions means more money The more successful acquisitions that can be made , the more money PE makes . When it ’ s time to exit , the buyer of the business is usually another PE firm and the faster fresh capital can be deployed on more acquisitions by the new PE owner , the better the rate of growth in the overall value of the business as can be seen in the case of CloserStill Media .
• 2012 – Northern Venture Management sold to Phoenix Equity for £ 25m
• 2015 – Phoenix sold to Inflexion Private Equity for around £ 100m
• 2018 – Inflexion sold to Providence Equity Partners for £ 340m
The success of this model depends on there being enough businesses to buy and this will be a major factor in how M & A develops in the future . An organic launch ( unless it ’ s a replication of an existing show into another market ) is too slow for PE owners given the short time horizons for their investment . This means that most of the portfolio of a PE owned exhibition organiser is derived from acquisitions .
March — 09