In one of the largest B2B media transactions this year, Northstar Travel Group, which provides a broad array of products in the retail and corporate events markets, was sold from one private-equity firm—the Wicks Group—to another, Wasserstein Partners, Northstar CEO Thomas Kemp said today.
Investing alongside Wasserstein Partners IV were co-investors Alberta Teachers’ Retirement Fund Board, John Hancock, and Storebrand Insurance.
Northstar, based in Secaucus, New Jersey, owns brands including Travel Weekly, TravelAge West, Business Travel News, Successful Meetings, and Meetings & Conventions. It has expanded aggressively in Asia, building out versions of its domestic brands in China as well as adding new ones. Northstar produces more than 50 face-to-face events in 13 countries. It owns the business intelligence and event producer Phocuswright, which serves the fastest-growing segment of the travel industry—online travel distribution. And it’s the majority shareholder in Inntopia, the leading SaaS e-commerce software provider serving the mountain destination, activities, and specialty destination travel markets.
“We are excited to welcome Wasserstein as our new partner to provide the capital and investment experience to help Northstar achieve our next phase of growth,” Kemp said. “Wicks has been a great partner to the company and we thank them for providing guidance and insight over the last four years.”
“We are very impressed with the growth of Northstar Travel Group over the last few years,” said Anup Bagaria, Co-Managing Partner of Wasserstein. “The management team has done an excellent job of transforming its core business into an integrated information, data, software, event and marketing solutions company.”
Terms of the acquisition were not disclosed, but Northstar has grown dramatically in the last seven years, with a compound annual growth rate of 14 percent in that period, Kemp said. The company expects revenue to hit $80 million in 2016, and is growing organically at a current rate of 10 percent, according to Kemp. It has reduced print ad revenue from 75 percent to about 30 percent of total revenue, and it's estimated that 2016 EBITDA for Northstar will be approximately $20 million, a 24 percent margin.
Kemp also said the Northstar deal goes counter to the prevailing thinking that drives recent B2B media transactions, in which buyers seek (and executive teams prefer) a dominant, single-channel position. Reed Exhibitions and UBM both represent that model, Kemp said. Indeed, UBM just last week sold off its electronics-media portfolio, including EE Times, EDN, ESM, Embedded, EBN, TechOnline and DataSheets.com, for $23.5 million. And late last week, it acquired the Content Marketing Institute, whose major business is the Content Marketing World show.
“I think the whole concept of only buying large, standalone exhibitions is frankly a higher-risk position,” Kemp said. “You’re not nearly as connected in the market without data analytics and a full depth of integrated information channels. We’re focused on a full suite of solutions, rather than a single solution. When tradeshows go well, they go really well, but when they turn, it gets ugly.”
In fact, Kemp said, the deal represents the way forward for a transformed B2B sector. “There’s a new model, with content, with custom solutions, with data, with face-to-face, and even software,” he said.
Asked to characterize the EBITDA multiple in comparison to other recent deals and prevailing rates, Kemp said, “This was not a distress deal, no limping to the finish line.”
While Wasserstein already owns two major B2B companies—Penton and ALM—Kemp said Northstar Travel Group will remain independent, and retain its management team (including Kemp) and is the first portfolio company in a new Wasserstein Fund 4.