The Global Media Weekly for executives and entrepreneurs

Pageant ready for take-off

Pageant Media, the UK-based, privately-owned financial news, data and events company, is expected to be acquired by private equity for some £120m in the next few months.

The company, which claims more than 2,500 institutional clients including 94 of the world’s 100 largest asset managers, is 56% owned by CEO Charlie Kerr who co-founded Pageant 22 years ago with schoolfriend Seb Timpson. In 2018-19, it had EBITDA of £5.5m on revenue of £24.3m. It is expected to make some £9.5m on £32m revenue in the 12 months ending in February – 60% revenue growth in the past two years.

The expansion reflects a successful acquisition strategy involving nine deals in the last decade, mostly self-funded.

Membership revenues

But the the expected 12 x EBITDA valuation is also boosted by the fact that some 55% of the revenue comes from readers and more than 50% from the US, with less than 10% from advertising.

Pageant offers proprietary data, “actionable insights”, and events across a range of financial sectors. Its major brands include: AltCRedit (for credit professionals), Fund Directions (fund directors and trustees), HFM (hedge funds), and Pension Bridge (institutional investors).

The secret sauce is its membership programme under which financial professionals pay an average £7-10k per year in order to receive news, information and data, and attend invitation-only events.

The 2017 appointment of Bain private equity’s Graham Elton as Pageant chair (succeeding veteran B2B Brit Richard Flaye) illustrated the way Kerr has been wide open to new skills and experience. No fewer than eight of Pageant’s 11-person top team have joined in the last five years.

These recruits from admired competitors have seemed to point towards a fundraising, sale or IPO. But so has the ambitious M&A, none more so than last year’s £17m acquisition of the Florida-based, The Pension Bridge Inc, which provides neatly elite B2B events for investors. The 2019 three-day annual conference in San Francisco restricted attendance to only 100 “manager firms” and 125 “pension funds/ consultants”.

CEO with a difference

Charlie Kerr is a fascinating CEO. UK newspapers recently managed to make something of the fact that he left school at 16. In conveying the impression of a lightly-educated rebel, they managed to omit the detail that he is the son and heir of a hereditary British Lord (yes) and attended a swanky boarding school. But he really did build his business career the hard way, selling classified ads for regional newspapers and low-value magazines for a decade before going it alone.

He and Timpson say they bootstrapped Pageant with maxed-out credit cards. Their first B2B magazines were Offshore World (failed) and E-Gaming Review (which still accounts for up to 10% of the company’s revenue). At the start, it was a classic 20th century B2B publisher of free magazines funded by advertising, but Kerr saw the light. The 2008 banking crisis gave him experienced jobless recruits as he shifted his telephone sales teams over from selling low-value advertising to high-value subscriptions.

It was a dramatic change.

Back in 2012, some 40% of the company’s revenue came from advertising. But now it’s all about pre-paid subscriptions laced with the magic of membership.

Pageant’s much-vaunted database covers the investment activity of the world’s biggest funds.The company publishes 1,000 articles a month for 2,500 paying member companies in 60 countries, and operates over 200 events per year, including conferences and round tables. It has an unmistakably smart, live-wire reputation among customers, and employs more than 200 people in the UK, US, and Hong Kong. 

It has now appointed London-based Livingstone to find “a strategic partner”, meaning a funder with which Kerr can work (and presumably retain at least 30% of the equity) in order to rapidly expand the company. So it has to be private equity, not a meddling trade buyer from the ranks of Bloomberg, Euromoney, the Financial Times, or Reuters. 

Ready-made deal?

Pageant will be talking would-be investors through its wish list of acquisitions, not least to grow the business in the US and Asia. But an early target may be close to home. It is 18 months since Bridgepoint private equity bought PEI Media (publisher of Private Equity International and the high-rated PEI 300 ranking of the world’s pe groups). The price was a rumoured £120m (some 18 x 2017 EBITDA of £6.5m) – 3 x the PEI valuation in 2015. The company had been formed in London following a 2001 MBO from Euromoney (which has also sold two businesses to Pageant). PEI Media’s 2017 revenue of £26.9m (£8.5m EBITDA) was 20% up on the previous year.

A “merger” with PEI could be a good fit for Pageant whose CEO must also be wondering whether he can even match PEI’s own multiple –  which could value his business at almost £180m.

The dream scenario, though, is provided by Acuris. The 20-year-old business began life as MergerMarket, was sold to the Financial Times six years later for £101m, and was last year acquired by ION at a value of £1.35bn. The MergerMarket founding idea had been: “There is a lot of information out there, but very little intelligence.” To explain: the company, which began with journalists recording details of transactions, quickly realised the infinitely higher value of exclusive “pre-event” intelligence. 
That is increasingly the motivation of Pageant Media and, more broadly, helps to define the difference between fast-growing digital B2B news-information businesses and the traditional approach to “journalism as a matter of record”. In an era when digests and aggregation (increasingly AI-driven) have undoubted value, many more media companies need to make the step-up to high-value, predictive “intelligence”.  Reader will always value services which provide a record and fill in the gaps in “known” information. But the caviar is the insight into what should, might or will happen – underpinned by data and relationships.
What a big winner like Acuris illustrates is not just the scale of the reward for such intelligence but also the fact that journalists can be crucial to achieving that swing to “pre-event” insights in combination with strong systems and data management. As in so much else, many traditional media companies could do it. If they really want to. But they have to hurry because data-driven, agile companies like Pageant Media are rushing to get there first. They won’t be small for long.