NEW YORK — As Chairman and CEO of Emerald, one of the largest organizers of B2B trade shows, conferences and events in the United States, David Loechner completed more than 16 acquisitions in five years, doubling the size of the company. He then led the company through its IPO in 2017, earning the TSE’s highest honor, the Gold Standard in Excellence Grand Award. Prior to that, in 2013, as Chairman of Nielsen Expositions, he led the sale of Nielsen to privately held Emerald.
Today, as managing director of mid-market independent investment bank Berkery Noyes, Loechner is uniquely positioned to share insights on what buyers and sellers might be looking for in the post-pandemic M&A landscape. He recently spoke with Trade Fair Managerby Frances Ferrante.
Frances Ferrante: As we begin to emerge from the pandemic, what M&A trends do you anticipate emerging in the trade show space?
David Loechner: Buyers who will start this recovery will be looking to acquire individual events or platform operators again at a multiple of EBITDA a few turns lower than pre-pandemic. On the other side, sellers will be looking for multiples close to pre-pandemic. So it will be a bit of a dance for a while.
I believe forward-looking, long-term focused buyers will see top events and event operators quickly return to more historical levels. M&A competition will be fierce once events start to roll out again and prove their resilience.
Françoise Ferrante: Generally speaking, what types of companies are looking to grow post-pandemic through M&A?
David Loechner: We can expect the usual players, who have plenty of room to maneuver, to once again seek to grow through M&A, as they did before the pandemic. Several new companies are also looking to invest in and acquire association shows or individual events and/or build portfolios of events with the backing of banks, private investors or private equity firms. These companies include Trifecta Events with Rick McConnell (formerly with Informa), ARC with Simon Foster (formerly CEO of Comexposium) and AIP with Galen Poss (Vice President of DMG).
Françoise Ferrante: What is most attractive to private equity investors and what qualities do trade show companies look for most in M&A projects? Are they both looking for similar qualities?
David Loechner: Most buyers want the same thing: to create value in the acquired business under their control. This can take the form of cost or revenue synergies, improvement or professionalization of the business, or complementary acquisitions around it.
Private equity firms, banks, or other investors interested in the space without a current portfolio of events, digital or data products, or content properties typically look for larger acquisitions or operators with multiple events rather than acquiring a single show (unless it is of substantial size). Almost all acquirers first develop an acquisition thesis. In other words, “Why buy it?”
Sellers can and should ask themselves the same question: “Why sell?” There is much more to a seller than setting a price and selling their property. Many trade show organizers and associations successfully establish financial and intellectual partnerships with buyers for years, if not forever.
Most acquirers have a list of commercial, financial and legal due diligence requests that they will review, but before that, they have a checklist that they run most acquisition targets through, including the obvious financial performance of the last 3-5 years. They will also ask themselves: What is the market position of the property? What are its future growth or risk characteristics? What strategic value does it bring us? What sector does it operate in and is that sector attractive? Are there revenue or cost synergies that can be exploited?
Buyers will also look at the history of key performance indicators, the management team, the competitive advantage or disadvantage of the product, customer retention, the cyclicality of performance, including the recession and what we call the “COVID effect,” as well as cash flow characteristics and margin profile. And now, acquirers will look for tools and services that take customer relationships to the next level, including data and digital products and services.
Longtime trade show executive David Loechner joins investment bank
Contact David Loechner at David.loechner@berkerynoyes.com or (646) 442-7940.