A highlight from 109. How to Prepare a Business for Private Equity Acquisition

M&A Science


We're gonna talk about the process of preparing a business for private equity acquisition. Are today. fill on fine thank you. How are you doing great. Can we kick things off with a little bit background on yourself. Particularly your emanate background. I been in the media trade shows if you called trae media interesting question. Mark to detroit tries and exhibitions. I'll media forms a toll on and off for about forty years. I some large media groups over here in europe. In germany japan and movements trade shows to know much about trade tries to tell you the truth. But it's a very very interesting sector on it's very liberal. Nonsectarian surreal under the radar. So i've been. Ceo of two three of the largest business in the world over the last twenty twenty five years and i say very very interesting section and those roles. How early did you start acquiring other businesses almost immediately there. Interestingly if you go back to nineteen nineteen era belts of the one that he publicly quoted trite trout companies. I mean most trade chose wearing by stations and indeed incites. Most trade shows are still in biocides creations which made them even more under the right now but trade show groups which grow up. We're basically financial engineering. At the time it was possible to acquire berry by good Existed for maybe fifty three or four times earnings time. If you wanted to pay for good magazine group newspaper group you might pay twenty times if you like a story of my favorite cameos thousand nine thousand nine. Why company bolts a trade. Show called bassinet. Which was french. And it's the largest trading fronts usually has about six hundred thousand attendees. It's an for the building. Trade means a building tried a we paid about eight million dollars for it and we bought it at three and a half times even though i was nineteen thousand nine hundred nineteen nine walter annenberg sold. Tv guide the tv guide. You say at supermarket checkouts three point. Seven billion dollars. Which is the highest price paid for magazine before all said three point. Seven billion dollars now role on just nineteen years. Two thousand eight and bassey match which expanded quite successfully Moved into russia while twelve mall kits was valued at that time at around four hundred million. The show itself is four hundred million dollars from eight billion dollars to four hundred million dollars in that nineteen year period and the same year. Tv guide was sold to products the house in california for nine million dollars otherwise gone from three point seven billion nine billion dollars and that not shell tells you a great deal about trade shows and what happened to try And what happens. In other words they were on known they were massively undervalued relative to other meteorologists turned on its head and by twenty twelve apart from you know the obvious. Web linked services trade shows were commanding. The highest prices of any media form the companies that golden early when you could buy to threaten hall full times. What doing very very well by that point. As change you see multipliers. Go up since then. Ignoring bless fifteen months What's going to happen as we move out of covid the multiple well in two thousand nine. Let's daylight it was beginning of two thousand and nineteen quite a big show. Seventeen times and the quite a few deals in in europe and the us fifteen sixteen times in twenty eight thousand twenty nineteen. I'll order quite big deals and for decent large properties. That was the kind of number and you compare that with the multiple you get most of the media forms and it remains pretty high your primary strategies consolidations. Yeah what are you typically look for in a company. You krista ability. Obviously you do the ready three reasons. Why people invest in trade shows. I often have these kinds of conversations. On one of the questions is why is private. Actually interested in trade shows and exhibitions. And i think the answer is not while they are interested. But why did it take so long for them to become interested because all of the truths about trade shows which says forty three principal elements why trade shows have become a very attractive investment number one the margins of very very high. Well run businesses. I liked my as well run. Businesses will be generating twenty seven. Twenty eight twenty nine thirty percent margins on number one number two. The cash comes up front. It's a bit like insurance floats. Exhibited pay you enough bounce. So you're taking the money in advance and you pay the costs of running the exhibition at the time you run them. So you've got it bounce cash way. That's very very important number. Three is roger their full thing. Some of the three is a good solid. Trade show will be able to breathe -able all its exhibits us for the next event. So if you're running on your legs your you're running by nearly every two years at the show you talk to your exhibitors yesterday. They wanna come back next time. Do they want the same slow on the floor. Bega sort javits well show will get eighteen. Ninety percent of people say signed me up. I'm going to join the club travels so you have a continuous very very good shot and the full reason classic warren buffett. I like businesses. You can build a motor around and trade shows fulfill that very very well because now i'm speaking worldwide. It's anything it's slightly less true in the us in most other markets in the world if you've got a slot muster save security slaughter venue for security show and that's well established and have a good relationship with the people that owned the venue then they will not allow another security challenge that most big markets in the world. There are probably only two major venues so with that relationship with that slot. You've actually got control of the marketplace because all people don't come in and compete with you. It's less trouble states. Of course kasparov fumble convention centers in the us. But he's also the trash that out of the twenty five biggest shows in the states. I think twenty wall rung in vegas orlando. i'm broadly. The sentencing applies. It's very very hard to compete in vegas against an established show. The show. is that people revoked for it. And the venues very cherry about allowing much competition so you build a move around your business as well. It's not unlike airlines of major colts. Heathrow london turns to be the major exemple pretty shy away fifty percents of the slot. So t thrive. They're all tiny mole salts speakers. The pokes a full british airways have being consistently one of the most profitable companies in the world. For at least thirty is and that isn't because that is great tool that planes better know about airline exceptional

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