ROLE OF MERGERS AND ACQUISITIONS IN THE TRANSFORMATION OF THE GLOBAL EVENTS INDUSTRY

Transcription

1 ROLE OF MERGERS AND ACQUISITIONS IN THE TRANSFORMATION OF THE GLOBAL EVENTS INDUSTRY presented by Richard Mead, Managing Director The Jordan, Edmiston Group, Inc. New York, USA January 14, 2015

2 Setting the Stage Role of Mergers and Acquisitions in the Transformation of the Global Events Industry Study the past if you would define the future Review what has happened over the past 20 years in the events industry in Western Europe and North America All the world's a stage, and all the men and women merely players A guide for the transformation of the Chinese events industry Source: biography.com 2

3 Why Does the Chinese Events Industry Need to be Transformed? The Chinese events industry is highly successful Serving the most populous B2B and consumer markets in the world # 2 in Net Square Meters sold globally Benefitting from farsighted investment in modern event facilities and infrastructure So what needs transforming? Or, what happens if the Chinese events industry is not transformed? Potential risks of standing still Risk of loss of market relevance to your customers (ie. buyers and sellers look for alternative ways of interacting) Risk of loss of opportunity to promote international trade for the benefit of the Chinese economy Loss of opportunity for event owners to grow shareholder value 3

4 Discussion Agenda 1. About The Jordan, Edmiston Group 2. The Importance of the Global Events Industry 3. The Transformation of the Events Industry in Western Europe and North America 4. Strategic Thinking and M&A Case Studies 5. Conclusions for the Chinese Events Industry 4

5 About JEGI Leading Independent Investment Bank Serving the Media, Information, Marketing and Technology Sectors Industry Leadership With deep relationships and expertise across global and emerging media, information, marketing and technology sectors, JEGI anticipates trends and provides impactful advice. Independence JEGI is committed to the success of each client assignment, with no sales and trading, lending or private equity investing to conflict with advisory client priorities. Focus JEGI executes international M&A assignments with integrity and best practices, conducting efficient, highly effective processes to maximize outcomes for clients. Experience After 27 years and more than 500 transactions, JEGI consistently exceeds expectations and delivers successful results. Results JEGI s team-driven process achieves the highest transaction success rates at maximum value, bringing enthusiastic endorsements from satisfied clients. 5

6 JEGI At the Core of Evolving Markets Entrepreneurial Owners Private Equity/Venture Capital Owned Companies Global Corporations Positioned at the epicenter of converging markets, enabling JEGI to uniquely bring a wide array of creative buyer and investor ideas to our clients Providing direct insight into M&A market conditions, valuation drivers and buyer hot-buttons 6

7 About Richard Mead Richard Mead, Managing Director, JEGI Joined JEGI in 1997 and has successfully led more than 100 of the firm s signature transactions Represents B2B marketing solutions, information, exhibitions and conference companies in an M&A advisor role Offers clients a broad cross-section of experience as buyer, seller and advisor to public and private companies Educated and trained as a Chartered Accountant in the UK International M&A partner in KMPG and Ernst & Young, London and New York BA Honors in Economics and Accounting from the University of Bristol, UK and Master of Science degree from the University of Warwick, UK 7

8 JEGI Leading M&A Advisor for Events Globally 8

9 Discussion Agenda 1. About The Jordan, Edmiston Group 2. The Importance of the Global Events Industry 3. The Transformation of the Events Industry in Western Europe and North America 4. Strategic Thinking and M&A Some Case Studies 5. Conclusions for the Chinese Events Industry 9

10 Trade Shows at the Heart of Commerce The Global Events Industry The Leading B2B Marketing Channel Local markets have existed for over a thousand years in Asia and Europe An essential part of commerce and human interaction Trade shows have evolved into the current event model over the past 20 years They still retain the key characteristics of in person trade between buyers and sellers More sophisticated and productive experience for participants to deliver a satisfactory return on investment (ROI) Events and their variants (hosted buyer events, custom events, etc.) are becoming increasingly global as they follow their customers around the world Strongly influenced by the Internet and international travel 10

11 B2B Global Events Sector High Margin, Growth Market Source: UBM 11

12 Top 12 Countries by GDP Trade Show Growth Rates Tied to GDP Growth Region 1993 (US $BN) 2003 (US $BN) 2013 (US $BN) Percentage of World Total 2013 CAGR CAGR USA 6,879 11,511 16, % 5.3% 3.5% China 441 1,641 9, % 14.0% 18.9% Japan 4,415 4,303 4, % (0.3%) 1.3% Germany 2,068 2,502 3, % 1.9% 4.1% France 1,330 1,848 2, % 3.3% 4.3% UK 1,043 1,943 2, % 6.4% 3.3% Brazil , % 2.3% 15.1% Italy 1,062 1,570 2, % 4.0% 3.2% Russian Federation , % (0.1%) 17.2% India , % 8.1% 11.8% Canada , % 4.4% 7.5% Australia , % 4.1% 12.8% Total 19,282 28,272 51, % 3.9% 6.1% World Total 25,742 38,560 75, % 7.0% Source: World Bank 12

13 Discussion Agenda 1. About The Jordan, Edmiston Group 2. The Importance of the Global Events Industry 3. The Transformation of the Events Industry in Western Europe and North America 4. Strategic Thinking and M&A Case Studies 5. Conclusions for the Chinese Events Industry 13

14 The Transformation of the Events Industry in Western Europe and North America Transformational activity has been most pronounced in the publicly quoted events companies over the last twenty years Supplemented by private equity investors in events platforms Specific transformational drivers Organic growth has been steady, not spectacular, following the 2008/9 recession Participants buyers, sellers and sponsors demand a better, measurable ROI Expanding beyond local markets in order to follow their global customers acquisition or JV Evolving the trade show model new revenue streams (i.e., e-commerce) Increasing pressure on margins drives need for operational efficiencies A growing organization attracts the best human resources Many of these drivers are directly relevant to the Chinese events industry 14

15 Trade Shows Only the Tip of the Iceberg Only 20% of Business Communities Attend Trade Shows Typically 20% or less of the total industry community attends a trade show annually Similarly, approximately 20% of total spend by trade show participants goes to the trade show operator; 80% goes to other event service providers Related service providers contractors, planners, etc. are being consolidated into the ownership of a few leading companies What, if any, are the implications for trade show operators? 15

16 Major Event Service Providers Significant Portion of Total Spend on Events Goes to Service Providers Freeman GES Cvent GPJ SMG Alibaba Ownership Private Public Public Private PE Public Technology Focus Increasing Increasing Yes Yes No Yes Global Focus Yes Yes Yes Yes Yes Yes Acquisitive Somewhat Yes Yes Yes No Yes Functional Areas Operational Service Providers Yes Yes Yes Yes Yes No Marketing Services No No No No Yes Yes Customized Events No No No No No No Facility Managers No No No No Yes No E-Commerce No No No No No Yes 16

17 Global Events Industry Leaders Location Focus Well Positioned for Transformation and Consolidation UK EU ME Russia Africa North America South America Asia Reed Exhibitions UBM + Advanstar Informa Events Emerald GL Events ITE Diversified Comexposium Clarion Events DMG Events i2i Tarsus Penton Questex Source: Company Reports 17

18 Millions Major B2B Public Strategic Companies With Events The Major Strategic Event Companies are Back to 2008 Levels? 2,500 Revenue EBITDA CAGR 2, % 1,500 1, % EBITDA Margin 23.1% 22.9% 23.8% 23.3% 20.8% 25.7% 26.1% 26.9% Source: Company Reports 18

19 Millions Major B2B Public Strategic Companies With Events But How Will They Make Up for Lost Time? 2,500 2,000 Revenue EBITDA 425M 1,500 1, M EBITDA Margin 23.1% 22.9% 23.8% 23.3% 20.8% 25.7% 26.1% 26.9% Source: Company Reports 19

20 Discussion Agenda 1. About The Jordan, Edmiston Group 2. The Importance of the Global Events Industry 3. The Transformation of the Events Industry in Western Europe and North America 4. Strategic Thinking and M&A Case Studies 5. Conclusions for the Chinese Events Industry 20

21 Major Change Factors Global Economic Growth, Consolidation and Technology Recent M&A activity in Western Europe and North America underscores the value that investors place on the global events industry Transaction multiples of 4x TTM Revenues and 10x TTM EBITDA, or higher, are not unusual even for smaller transactions Implies double digit Revenue and EBITDA growth, faster than GDP growth Ongoing consolidation in a highly fragmented events industry Technology is playing an increasingly important role in how event operators serve their communities What will be the long term competitive impact of technology companies (i.e., Alibaba and Cvent)? 21

22 Transformational M&A Activity Rationale M&A activity has been a constant theme in the development of the B2B sector since the early 1990 s Building market position and share, domestically and globally Transformational acquisitions to accelerate growth Niche acquisitions to expand market penetration Since the early 2000 s, the M&A focus has shifted Events trade shows, and conferences - have become more valuable as face-to-face has increased in importance as the preferred marketing channel Content fell out of favor, but is now experiencing a resurgence with digital and print products supporting events and other B2B marketing channels Extensive M&A pipeline of potential acquisition targets 22

23 Events M&A Life Cycle Progression Major Strategics Trade Associations Entrepreneurs Private Equity Platforms Messes and Others 23

24 Transformational M&A Activity Case Studies Flurry of new Strategic Plans from recently hired CEOs at major B2B companies General theme is Events First Case studies for the leading events companies Reed Exhibitions Informa UBM The role of Capital and its supply Critical to enabling the development and consolidation of the holistic B2B marketing model that includes trade shows at its core Plentiful supply currently strong debt markets, non-traditional providers and even IPOs, plus healthy cash flow for re-investment 24

25 Timeline of Major Transformational M&A Transactions Reed Exhibitions UBM Informa Emerald Advanstar Hanley Wood Nielsen Public Public Public PE PE Private/PE PE/Public 1998 Magic ($230) Miller Freeman Europe ($540) CMP Media ($920) 2005 IIR ($1,400) Sold to PE Group Sold Questex to PE Group Sold to PE Group Sold to PE Group Miller Freeman USA ($650) 2006 Sold to PE Group 2007 Sold to PE Group Canon ($287) 2011 Event Operators - Buyers Event Operators - Sellers 2012 MMPI ($53) ENK ($155) 2013 Virgo ($120) 2014 Advanstar ($972) Hanley Wood ($375) Nielsen Expo ($950) GLM ($335) Sold to UBM Sold to Informa Sold Nielsen Expo to PE 25

26 Reed Exhibitions A Division of Reed Elsevier Leading Global B2B Trade Show Operator ( million) Group Revenues 2,796 4,925 6,035 Group EBITDA 617 1,237 1,998 Group Debt 1,078 3,010 3,281 Factsheet UK Public company division 15% of Reed Elsevier Group revenues 2013 revenue growth 7% 43 industries served 40 countries 3,500 staff worldwide HQ Richmond, UK Events Revenue Events EBITDA # Events Strategy Global expansion Growth through ongoing event launches and tuck-in acquisitions Most significant acquisition Miller Freeman Europe (2000) We supplement our organic development with selective acquisitions, when we are the natural owner and can accelerate our strategy with good returns. We continue to divest assets that we are not able to migrate or where we do not see significant future value creation for Reed Elsevier. 26

27 Reed Elsevier Revenue Growth Underlying Revenue Growth Across Business Areas Source: Reed Elsevier 27

28 Reed Elsevier Exhibitions Source: Reed Elsevier 28

29 Informa Growth Acceleration Plan Targeting Events Acquisitions ( million) Group Revenues ,132 Group EBITDA Group Debt Events Revenue N/A N/A 415 Events EBITDA N/A N/A 96 # Events N/A N/A 3,000 Factsheet UK Public company Created in 1998 through merger of IDC and Lloyds of London IIR events acquisition in 2005 Events represent 37% of 2013 group revenues % organic Recent event acquisitions Hanley Wood ( 242 million) Virgo ( 77 million) MMPI Canada ( 34 million) Strategy Balance & Scale Develop digital content-based marketing model Drive international diversification Establish leadership in priority verticals 29

30 GAP Operating Structure: Global Exhibitions Source: Informa 30

31 Informa GAP Acquisition Strategy Source: Informa 31

32 Informa GAP Acquisition Strategy Building Geographic Strength in Global Exhibitions Source: Informa 32

33 Informa GAP Acquisition Strategy Building Vertical Strength in Global Exhibitions Source: Informa 33

34 UBM Growth Events Momentum Events First Strategy ( million) Group Revenues N/A Group EBITDA N/A Group Debt N/A Reed Exhibitions Revenue N/A N/A 463 Reed Exhibitions EBITDA N/A N/A 149 # Events N/A N/A 400 Snapshot UK Public company UBM has re-invented itself over the past 10 years through acquisitions and divestitures 2013 events accounted for 59% of group revenues and 53% of group EBITDA Advanstar acquisition in 2014 will take group closer to being a pure play events business Leading event operator in China and USA Strategy Events First Focus on customer ROI Industrialize Advanstar integration Ongoing acquisitions 34

35 UBM Events First Investment Proposition Source: UBM 35

36 UBM Events First Shareholder Value Source: UBM 36

37 UBM Technology Creates Opportunity Source: UBM 37

38 UBM Positioned For Growth Source: UBM 38

39 Discussion Agenda 1. About The Jordan, Edmiston Group 2. The Importance of the Global Events Industry 3. The Transformation of the Events Industry in Western Europe and North America 4. Strategic Thinking and M&A Case Studies 5. Conclusions for the Chinese Events Industry 39

40 Conclusion Opportunity to Grow Shareholder Value in a Large, Global Industry The global events industry is huge with plenty of opportunity for all event operators to grow and transform The events industry must transform and evolve to push growth and continue its strong position in the B2B marketing channel As seen by Reed Elsevier, UBM, and Informa an Events First approach and a strategic use of readily available capital helps to build a global event presence 40

41 Conclusion Strong Platform to Capitalize on Growth Opportunity Chinese event operators are well positioned to transform their business models and expand globally over the next decade Market benefits from a stable and sizeable pool of Western buyers and sellers that want access Event operators are well positioned to help the Chinese industrial base access global markets Chinas has built extensive state of the art event facilities with ample space Options exist to expand domestically and overseas through local acquisitions and/or joint ventures with global event companies Capital is readily available to finance the ambitions of the Chinese events industry He who does not grasp the future lives in the past 闵睿德 41

42 ROLE OF MERGERS AND ACQUISITIONS IN THE TRANSFORMATION OF THE GLOBAL EVENTS INDUSTRY presented by Richard Mead, Managing Director The Jordan, Edmiston Group, Inc. New York, USA January 14, 2015