Advisory Firm: Trade Show M&A Bubble Could Not Be 'Sustained Indefinitely'

Only activity now comes from strategic buyers looking for bolt-on acquisitions.

By Jason Fell
01/29/2010

The buying "frenzy" in the trade show industry over the last 10 years has come to a crashing halt, according to trade/consumer show and trade publishing M&A advisory firm Corporate Solutions. The firms said it tracked 21 mostly smaller trade-show related deals in 2009, down from 32 in 2008.

“Valuations were hit hard in 2009, more so than in any proceeding year in decades,” the firm said in its January e-newsletter. “The average range multiple for trade shows has been slashed in half from 8x to 10x EBITDA in 2008 to 4x to 5x in 2009.”

While Corporate Solutions said it doesn’t track deal values it does expect to see valuations start to increase “modestly” throughout 2010 although they will remain at levels much lower than recent years.

“All of any activity in today's M&A market revolves around strategic buyers looking for opportunities to acquire smaller competitors in similar markets with bolt-on acquisitions,” the firm said. “Buyers are staying within the industries that are familiar to them.”

Among the 21 trade show deals tracked by Westport, Connecticut-based Corporate Solutions last year was Active Interest Media “asset swap” deal early last year for 10 of F+W Media’s log home shows, Ascend Media’s sale of several medical events to company founder Cam Bishop in September and Nielsen Business Media’s sale of five film-related events to e5 Global Media. Corporate Solutions is led by president Nick Curci, who was named to the 2007 FOLIO: 40.

The Trade Show Market Has Burst

Corporate Solutions said that as the M&A market starts to turn positive and activity starts to increase this year, the industry will see more small deals as buyers—who will be careful not to overspend—return to the marketplace in search of acquiring smaller competitors.

“The buying frenzy in the trade and consumer business over the past 10+ years created a bubble that did not have a chance to be sustained indefinitely (not unlike the housing market),” the firm said. “It is not realistic to expect buyers to realize a fair return on investment when they have to pay 10x to 14x times EBITDA for any event. Having to service this debt at the same time as trying to grow the business is not very practical.”

On top of that, the companies that purchased events between January 2006 and September 2008 are “feeling the pain of reduced sales, huge debt payments and slow growth going forward.”

“This is why we have seen so many large media company failures last year,” Corporate Solutions said. “Several large companies were forced to file for bankruptcy protection and sell event related assets. This trend will likely continue for the early part of 2010.”