Steve Monnington, managing director of Mayfield Media Strategies, looks back on M&A activity in 2020.
As we start a new year, it is worth a look back on 2020. Normally my mergers and acquisitions (M&A) review of the past year is logical, sometimes predictable and follows the trends from previous years, but Covid has changed all of that. When lockdown came, all acquisition transactions that were in process were put on hold and, 10 months later, many remain on hold and will be so until it’s clear that there is a reliable opening date for exhibitions.
As a result of this, the number of transactions in 2020 was significantly down from the usual 70 to 80, to a record low in the last 20 years of just 38.
Even this is slightly misleading as the first two months of 2020 were at the usual level while the last ten months slowed right down:
It may be surprising that, in lockdown, there were still more than 20 acquisitions, but in the main these were either Covid-related transactions involving association owned shows with cash flow issues and small private organisers with their businesses under threat, or businesses that have successfully created digital revenues.
There were three notable digital related transactions in the last couple of months of 2020. In my last column I reported on Clarion’s acquisition of Quartz Events and the acquisition of Masters of Pediatric Dermatology by Tarsus, both great examples of deals that only happened because of the successful pivot from physical to digital.
The acquisition of pure digital businesses as a complement to physical events is likely to become the norm and a great example of this is Hyve’s acquisition of Retail Meetup, almost exactly a year from when they acquired physical events, Shoptalk and Groceryshop from the same founders – Anil Aggarwal and Simran Rekhi Aggarwal.
Retail Meetup becomes Hyve’s flagship digital format and four events are planned for 2021 - Groceryshop Spring Meetup, Shoptalk Meetup for Women, Shoptalk Europe Meetup and Shoptalk Fall Meetup. All are planned at times of the year to be complementary to the in-person Shoptalk and Groceryshop events.
Looking forward to 2021, It’s much harder than normal to make predictions for the next year but here goes:
• We will continue to see association owned shows – primarily in the USA where there is a high proportion of them – either being sold to, or partnering with, traditional exhibition organisers.
• There will be several non-core disposals from the larger organisers. Disruption tends to focus attention on marginal parts of the portfolio, especially when redundancy programmes have depleted resources.
• The revelation that organisers can earn substantial high margin revenues from digital activities will start to attract data companies into the sector via acquisition.
• ‘Normal’ M&A transactions will slowly re-start but deals will have a different flavour with more emphasis on partnerships and longer earn-out periods for acquisitions to allow the businesses to grow back to 2019 levels.
It’s going to be an uncertain but fascinating year.