FOLIO:'s Top Deals of 2007.
BUYER: Veronis Suhler Stevenson, with Citigroup Private Equity and New York Life Capital Partners
SELLER: DLJ Merchant Banking Partners
PRICE: $1.14 billion
DATE: March 2007
TAKEAWAY: Advanstar has evolved from "stodgy old b-to-b publisher" to a leader in multiplatform publishing. However, a recession may seriously effect its events business.
VSS' $1.15 billion purchase of Advanstar was the first blockbuster deal of 2007. It was also one of the quietest (at least leading up to the announcement, catching much of the industry by surprise after the starts and stops of the Advanstar sales process in the two previous years. (One source says the deal was signed at 5 a.m. on March 29).
The deal represents VSS' largest purchase to date as well as a true return to publishing after VSS had sold off many of its existing publishing assets, including Hanley Wood. The deal included more than 60 publications and directories, 95 electronic publications and Web sites, and 47 regional and international trade shows and events.
DLJ had put Advanstar up for auction in July 2005 and was hotly pursued by Blantyre Partners, a company formed by former Advanstar CEO Robert Krakoff with backing from private equity firm Blackstone Capital Partners. The deal fell through because of a high asking price and a debt-financing penalty that left many observers thinking DLJ would be stuck with a company that it bought in 2000 for $900 million plus assumption of $520 million in debt.
"They went through a public auction that didn't work in 2005," a source told FOLIO:. "And, since they went through a busted auction already, maybe they would consider a private-transaction to avoid the publicity and the costs that a public auction entails."
At the time of the sale, Advanstar reported revenue of $110.7 million for the first quarter of 2007, up from $106.6 million in the first quarter of 2006. Net income rose 64 percent to $24.8 million.
Advanstar's trade shows, including the market-leading MAGIC fashion show, were what really drew the interest of VSS.
COMMENTS: "It has some of the largest and most sustainable trade show assets in the world ... The company also has good growth margins, a good management team and much better organic growth rates than most b-to-b companies, and a strong cash flow."
OTHER TOP DEALS:
Ziff Davis Enterprise
Clarity Partners/Modern Luxury
Summit Business Media/Wicks Business Information