Credit Tsunami Washes Out Event M&A Activity
By John Failla, CEO, Tesoro Events
Reprinted with permission from min's b2b - November 17, 2008

“Frozen” is probably the kindest adjective I’ve heard to describe the current status of the event M&A market. One M&A advisor recently explained how they would be lucky if two of the seven deals they are ready to close can actually secure the financing needed to happen. A plentiful supply of prospective strategic and financial buyers (as evidenced by the growing number of private equity firms attending industry events) ready to do deals with prospective sellers are being left at the altar due to a credit market that has washed out. Highly leveraged deals driven by abundant capital that drove purchase multiples to record levels have been replaced by infrequent and modest transactions that require little if any financing.

The current M&A market prompts the questions: What’s the impact of this changing dynamic on b2b media companies that have relied on buying assets and earnings to show growth? What should interested buyers and sellers do while the credit markets are frozen to position themselves for the inevitable loosening of credit and the gradual resumption of deal activity?

While transactions with the amount of leverage and purchase multiples of the past four years won’t be seen for quite some time, there are certainly things that prospective buyers and sellers can do today to get ready. As buying growth is stifled in this environment, media companies must focus on driving growth in existing products and launching new products while they get ready to resume deal making.

Prospective buyers can benefit by using this hiatus in the M&A market to conduct the higher-level strategic planning and market analysis needed to identify the industries, categories and companies that will be most attractive long term. They can also take the time to cultivate the relationships that often are the critical soft variable in winning a deal. Prospective sellers, in turn, can focus on the following areas to ensure they are ready to take advantage of the inevitable resumption of deal making:

Rationalize Your Portfolio
Ask the following questions: What is the ideal portfolio mix for your business five years from now? What markets should you be in? What markets should you exit? What niches do you need to fill in your existing markets to offer a compelling integrated solution in print, online and face-to-face? In the event business, Reed Exhibitions under Chet Burchett is a prime example of a company that has positioned itself for above-average growth by making tough strategic decisions related to portfolio management.

Ensure Your Existing Events Are Anchored to Meaningful Audience Needs
Every event you produce must address a well-defined audience need. As suggested by a speaker at last week’s InfoCommerce Conference, “Revisit client needs, because they have changed.” It has never been more important to ensure your events are targeting current, relevant needs. As attendance declines in face-to-face events tend to precede declines in exhibitor support, it’s essential to bring increased focus to attendee satisfaction at your existing events.

Tighten the Focus of Your Existing Events
Events targeting broad audiences are missing the opportunity to deliver the targeted relevant information that attendees value most in face-to-face media. Niche events are the strongest performers in today’s event market because they provide the greatest relevance. As I have suggested in a previous column, think of targeted events as vertical 3D Google searches. Attendee value is driven by focus and relevance.

Launch Events Opportunistically
Take calculated risks with well-positioned event launches to fill in niches in your existing markets. Evaluate which of the proven niche event models is best to fill a niche in your portfolio and meet an unmet market need. Regional extensions to existing events, events targeting a specific vertical market segment, events targeting the big buyers in a market and the growing use of “hosted buyer” events with prearranged appointments are all proven niche event models that can be launched with relatively low risk and investment.

John Failla can be reached at (914) 819-0693 or by e-mail at john@tesoroevents.com.