Event M&A and Valuations Three Things We Learned Since SISO 2015 - - PowerPoint PPT Presentation

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Event M&A and Valuations Three Things We Learned Since SISO 2015 - - PowerPoint PPT Presentation

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Event M&A and Valuations Three Things We Learned Since SISO 2015 And Two to Come Richard DW Mead April 2016 INTRODUCTION 2015/16 PROGRESS IN A CHALLENGING ECONOMIC YEAR THREE LEARNINGS 1. Valuations Remain Strong 2. Global

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Event M&A and Valuations

Three Things We Learned Since SISO 2015… And Two to Come…

Richard DW Mead April 2016

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THREE LEARNINGS

  • 1. Valuations Remain Strong
  • 2. Global Consolidation in B2B Events Sector is Slower Than in Other Service Sectors
  • 3. Debt/Risk Appetite Differs Between Strategic and Private Equity Investors

THE PLAYERS

  • Public Companies – The Current Flag Carriers
  • Private Equity Platforms – The Movers and Shakers

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INTRODUCTION 2015/16 – PROGRESS IN A CHALLENGING ECONOMIC YEAR

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  • 1. VALUATIONS

REVENUE AND EBITDA OF PUBLIC COMPANIES

Includes Organic, Launches, Acquisitions, Divestitures, Currency and Biennial Impact

$0.9 $1.0 $1.1 $1.1 $1.2 $3.6 $3.8 $4.0 $4.1 $4.4 2011 2012 2013 2014 2015 EBITDA Revenues

In USD billions (converted from GBP at 1 GBP/1.5 USD)

Rev Growth % 6.9% 6.2% 1.3% 6.7% EBITDA Growth % 9.0% 7.7% 2.1% 12.1% EBITDA Margin % 25.6% 26.1% 26.5% 26.7% 28.1%

CAGR: 5.2% CAGR: 7.7%

Note: B2B Events components of public companies used in this analysis: Ascential; DMGT; Euromoney; GL Events; Informa; ITE; MCH Events; RELX; Tarsus; and UBM

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  • 1. VALUATIONS

SHARE PRICES OUTPERFORMED THE FTSE 100 THROUGH Q1 2016

Source: London Stock Exchange Note: Public companies include: DMGT; Informa; ITE; RELX; Tarsus; and UBM

  • 10%
  • 5%

0% 5% 10% 15% Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

% Change in Quarterly Stock Price of Public Events Companies (1/2/2015 through 3/29/2016)

Public Events Companies FTSE 100

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  • 1. VALUATIONS

DOUBLE-DIGIT EBITDA MULTIPLES ARE THE NORM

Revenue Multiple EBITDA Multiple Average Public Company Enterprise Valuations 3.7x 13.0x Average Top Five M&A Transaction Comps 3.3x 11.2x

  • B2B Events Public Company Enterprise Valuations reflect size and growth prospects
  • Consistent double-digit EBITDA multiples for larger M&A transactions
  • The financial models used by investors to support these valuations include:
  • Historical and projected EBITDA growth rates
  • Current availability and cost of capital
  • Future cash flow for debt service
  • Acquisitions will supplement organic growth and new event launches to drive faster

EBITDA growth rates in the future, supporting double-digit EBITDA valuations

Note: Public companies include: DMGT; Informa; ITE; RELX; Tarsus; and UBM. Data as of 3/29/16. Public Company Data Source: S&P Capital IQ and Public Company Filings M&A Transaction Data Source: JEGI Transaction Database

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  • 2. GLOBAL CONSOLIDATION

THE GLOBAL EXHIBITION INDUSTRY Organizing revenues as a % of $24.2 billion market1

Sources: UBM 2015 Full Year Results Presentation and UBM Annual Report for 2015

1 Portion of market analyzed by AMR International for 2014. Includes: US; Emerging

Markets; Continental Europe; and UK. Excludes: Rest of World, estimated at $4.8B.

2 Pro forma for Advanstar revenues.

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  • 2. GLOBAL CONSOLIDATION

EVENTS COMPANIES M&A – BY NUMBER

25 35

Source: JEGI Transaction Database

16 22 12 12 12 2 6 7 3 16 5 4 14 7 7 2 1 2 1 2

25 33 35 23 37

2011 2012 2013 2014 2015 Public Companies Private Equity Private Companies Other

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$87 $263 $176 $1,565 $145 $185 $322 $1,338 $56 $849 $37 $6 $69 $61 $72 2011 2012 2013 2014 2015 Public Companies Private Equity Other $309 $590 $1,583 $1,682 $1,067

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  • 2. GLOBAL CONSOLIDATION

EVENTS COMPANIES M&A – BY VALUE ($USD millions)

Source: JEGI Transaction Database

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  • 2. GLOBAL CONSOLIDATION

CONSOLIDATION IN THE B2B EVENT INDUSTRY VS. TOP MARKETING AGENCY HOLDING COMPANIES (2011 – 2015)

Note: Marketing agency holding companies used in this analysis: Dentsu; Havas; IPG; Omnicom; Publicis; and WPP

25 33 35 23 37 98 127 115 132 116 2011 2012 2013 2014 2015 B2B Event Companies Marketing Agency Holding Companies

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  • 2. GLOBAL CONSOLIDATION

Clarion sold to Providence (Jan 2015)

  • Second foray into the events world for Providence
  • Clarion now in acquisition mode – Urban in the US

Charterhouse acquires control of Comexposium (Sept 2015)

  • Charterhouse replaced Unibail and gained control of CMXP
  • CMXP now in acquisition mode – two acquisitions in the US

Penton acquires TU Auto (Jan 2016)

  • Fast growing event & content business in the Global Auto sector
  • Scope to leverage Penton’s auto division and presence worldwide

Informa acquires Water and Wastewater Show (Feb 2016)

  • Acquired from Cole Publishing, which retained the media assets
  • Big splash by the new CEO of Informa Global Events

FIVE NOTABLE EVENTS TRANSACTIONS 2015 – 2016

Ascential IPO (Feb 2016)

  • Return to the public markets for Emap, now known as Ascential
  • Alternative exit option for the PE platforms of scale

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  • 3. DEBT/RISK APPETITE
  • 2011-2015 Public Company debt leverage was in the range of 1.6x to 1.9x EBITDA
  • Informa’s and UBM’s shareholders financed two major transactions (Hanley Wood and Advanstar)
  • Approx. $1.5bn in capital returned to shareholders in share buybacks, rather than invested in growth

PE MORE COMFORTABLE WITH USING DEBT IN M&A TRANSACTIONS

Sources: PitchBook; S&P Capital IQ; and Public Company Filings

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IN CONCLUSION – THREE THINGS WE LEARNED SINCE SISO 2015…

Valuations Remain Strong

  • Double-digit EBITDA valuation multiples for large

events companies, and some smaller ones

  • Historical EBITDA growth needs to be maintained to

support valuation models Global Consolidation in B2B Events is Slower Than in Other Service Sectors

  • M&A activity in the events sector is low, compared to
  • ther global service sectors
  • Strategic appetite is for niche acquisitions and new

event launches, not transformational acquisitions Debt/Risk Appetite Differs Between Strategic and Private Equity Investors

  • PE very comfortable with debt leverage, which is a key

component of their financial models

  • Strategics are not taking advantage of readily available

acquisition capital, at historically low interest rates

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Revenue Diversification Through Technology

  • Technology has been embraced by operators to

improve buyer and seller experience, but not yet a significant revenue stream

  • Year-round revenue generating engagement is still

elusive

Integrated Events and Content Model

  • Some event operators are looking at other media

businesses to provide a comprehensive engagement with their communities

  • E =MC2?

AND TWO TO COME…

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Engagement = (Meetings X Content)2

Albert’s Theory of Integrated B2B Media

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NEW YORK JEGI, 150 East 52nd Street 18thFloor New York, NY 10022 +1 212 754 0710 | www.jegi.com BOSTON JEGI, CIC Boston, 50 Milk Street 16thFloor Boston, MA 02109 +1 617 294 6555 | www.jegi.com LONDON Clarity, 90 Long Acre London WC2E 9RA +44 20 3402 4900 | www.claritycp.com

Enterprise Value = (Meetings X Content)2

Richard DW Mead Managing Director richardm@jegi.com