Too Much PE Money, Not Enough Great Events: Why Valuations May Spike

Private equity has poured billions into the events sector this year through acquisitions including Emerald/Questex, CloserStill and Hyve, betting that live events remain one of the few media businesses relatively insulated from AI disruption.

But, there’s a catch. The assets everyone wants are increasingly difficult to find.

Large, established event portfolios typically produce only modest organic growth, making acquisitions the fastest path to expansion. Buyers are therefore competing for a limited pool of younger, fast-growing events—a dynamic that industry executives say may be pushing valuations higher.

“It’s a supply-and-demand argument. It’s as simple as that,” said Nineteen Group CEO Alison Jackson. “Organizers have got to grow. Not everyone’s going to be able to do it. I think prices could go up, and I think there’ll be further consolidation.”

Greg Topalian, former chair of Clarion Events North America, said the shortage of attractive acquisition targets stems in part from the industry’s incentive structure.

Launching a successful event can take three to five years before generating meaningful returns, making it difficult for executives under quarterly earnings pressure or private equity ownership to justify the investment. As a result, many companies opt to acquire proven businesses rather than build new ones, leaving relatively few high-quality assets coming to market.

And with countless PE firms—many he’s never heard of—chasing events, he’s never seen demand for acquisitions stronger—amid a thin pipeline for quality targets.

“I’ve never seen that desire to buy interesting assets in our business. And there just aren’t that many,” he said, adding that “countless private equity firms” have identified live events as an attractive investment category.

Reed Phillips, a managing partner at investment bank Oaklins DeSilva+Phillips said that buyer will be willing to pay higher multiples for higher growth. But, if you don’t have sufficient infrastructure, that could depress the valuation.

“If it’s just kind of you, and you don’t have a strong supporting team, that could hold you back on the multiple, so it’s important to have a little bit more infrastructure around the business you’re developing,” Phillips said. Otherwise buyers will have to take into account staff they will have to add on top of other costs and profitability will go down.

They’ll say: “I’m not going to have the same level of profitability, so I can’t buy the business based on the profit you’re earning. I have to buy it based on what I might earn as I add costs, so that lowers the EBITDA they’re thinking about,” Phillips said.

Multiples

Steve Monnington, founder of Mayfield Media Strategies, an M&A advisory firm specializing in the exhibitions and events industry, doesn’t see prices skyrocketing.

“I don’t see any evidence of that at the moment. Buyers are having to be more competitive in a process but in general they won’t overpay,” Monnington said.

That said, the squeeze is real: Roughly two-thirds of acquisitions are founder-led, and every transaction takes another team of entrepreneurs out of circulation for as long as six years. In Monnington’s view, M&A in exhibitions “is ostensibly larger companies acquiring founder-led businesses,” with private equity money adding further pressure to find suitable targets.

Several other advisers and investors interviewed for this story were more direct, saying the combination of PE capital and a limited pipeline of high-quality founder assets has already driven up multiples—and, in some cases, pushed buyers into paying for growth that is still largely projected rather than proven.

The big event companies generally aren’t great at launching new shows—if they’re lucky, organic growth will hit 10%.

“I cannot see how Hyve can double, Closerstill can double, Apollo can double, Clarion can keep growing, without any further consolidation. There isn’t enough to buy,” Jackson said.

Jackson noted that Nineteen is looking at acquisitions where less than half of revenue comes from events.

“Would we have looked at them five years ago? No,” Jackson said.

“People will start to look at different formats. Some of the businesses that Hyve are looking at or have looked at are small events with 100 people. You know, that’s not a trade show…. We’ve got one [potential acquisition] I’d describe as a pure play trade show, the rest is a mix, and then it’s, what else can you add on? Is it membership? Is it information systems? Is it newsletters? Or is it a newsletter business that can become events? We’re all going to have to get a little bit more entrepreneurial.”

The post appeared first on A Media Operator.