Insight
Market-making rather than
dealing in 2019?
CEO Informa Exhibitions, Charlie McCurdy,
believes that mega-deals will be scarce on the horizon
for the exhibitions space in 2019
re there more mega-deals on the
horizon for the exhibitions space in
2019? I doubt it. If a ‘mega-deal’ is
defined as a transaction valued at more
than, say, US$500m, there just aren’t that many
exhibition organisers of scale out there. Of the top
ten organisers in the world, four are Messen and
not in the conceivable transaction pool. So, beyond
Informa and Reed, Comexposium has recently
transacted, Clarion has been building, and ITE and
GL seem solid in their positions. So, the merchandise
to make a mega-deal just isn’t available.
So, what’s the point of acquiring anyway?
Acquisitions need to be justified by improved
performance. How will the markets served by the
acquired company benefit? How can acquiring a
company consequently promise profitable growth
in the future? Those are essential questions. And
they’re the essential questions for ‘mega-deals’
as well as the sort of tactical, bolt-on acquisitions
that will carry on in any deal environment
as they always have, complementing organic
growth. There’s always a supply of such deals, as
entrepreneurs cash out or companies re-prioritise,
and it’s a great way to reinforce an exhibitions
portfolio.
That isn’t to say that deal-making in our
industry is going away. History has shown
that a period of increased consolidation is
often followed by tapering of deals. But
that’s OK, too. Deal-making is not so much
about getting big, as it is about getting
better – creating value by having greater
commercial impact on the markets that
our exhibitions support.
w w w.exhibitionworld.co.uk
“History
has shown
that a period
of increased
consolidation
is often
followed by
tapering
of deals.”
What, in any case, are the benefits of scale? It
needs to be very granular. For example, where
an organiser establishes comprehensive multi-
regional reach within a niche vertical market
sector; or multi-vertical reach within a defined
geographic sector. A larger enterprise has
opportunities to apply these benefits to multiple
verticals and multiple geographies in a coordinated
way.
Perhaps it’s good for our industry to spend some
time now improving our capabilities as organisers
or market-makers. Organic growth over time does
create more intrinsic value than M&A growth, after
all.
In summary, deals should be driven by the
opportunity to create value, both for ourselves as
show organisers and for our customers.
A pull-back in deal activity provides valuable
opportunities to focus more on investing on
internal talent while identifying ways to address
the needs of supplier communities in core niche
markets, whether vertically or geographically.
So, with or without deals, we seek to create value
in the marketplace for the suppliers who rely on
our shows and the buy-side who look to us in so
many ways.
Ultimately, our focus has to be on growing
the value of the enterprise itself. But to do that
we need to help grow the value of our
customers’ enterprises. And that’s what
answers the central question in deal-
making…what gives the buyer the right
to own and operate a business that
happens to be available at that moment
to buy?
Issue 1 2019
19