It’s 15 months since Informa Plc acquired Tarsus, the UK-based, pe-owned trade show organiser, for $940mn – some 10-16x EBITDA, depending on which year you choose. The world’s largest exhibitions group had not even waited for Charterhouse to formally start a sale process, which led us to believe that it was start of a post-pandemic M&A boom. But, despite speculation about Emerald, Questex and others, the only significant deal in 2024 has been Easyfairs with an enterprise value of €680mn (again a low price or an attractive one, depending on who you talk to). Douglas Emslie – who, as CEO, managed Tarsus for its entire 25 years – reflects on the exhibitions market and what comes next
Why have trade shows rebounded so strongly?
It’s a myriad of things. It’s the ability to see new products, it’s education and people want to go and understand what’s happening in the industry. It’s also to network. I really don’t think anything’s actually changed. And what the pandemic has done is really focused people on that human component of getting out and seeing people and exchanging ideas. Everyone realises what we had been missing during the pandemic.
Has there been a change of attitudes?
I think people everywhere have realized the benefits of face-to-face contact in their lives and in business because that had been taken away. You’ve seen that with travel which is a very, very good comparison because the numbers of people travelling have gone through the roof. Every time you’re on a plane, it’s full. Because we had two years when that was taken away from us, people are now saying, ‘I don’t care. This is now a priority in terms of how I spend my money’. That’s also what we’re seeing in events. The other thing is the fact that people are spending less time together in the office and they are then using events more to get face-to-face contact with people that they would historically have seen a lot more often. That’s a real change but I also think the pandemic brought quite a big shift in technology because, otherwise, so many organizations would have been unable to work from home; they would have been out of business. And technology is (again) changing how people do business. People are worried about AI but it’s a huge opportunity for the exhibition industry. It’s going to be a bit like the internet. It’s probably not going to be a new and distinct line of revenue – but it will enable you to grow your existing revenues and marketing opportunities.
AI will allow you to get more buyers of the profile you most want. Secondly, it’s going to be a bit like Netflix. You’re going to be able to understand much more about somebody’s preferences, and you’ll be able to serve up the precise types of products and companies those customers should see. All the change is likely to be very positive for us all – if we make the most of the AI tools and resources available.
How have trade show companies been affected so far?
It’s interesting for me because I’m no longer in a large company and can observe the interaction between big and small companies. I saw it in glorious technicolor at this year’s CISO event in Florida, attended by 350 exhibitions executives and entrepreneurs. It is clear that the big guys are launching fewer new events; they seem more likely to buy events or companies. By contrast, the small guys (a group of 40 entrepreneurs at CISO) were announcing the launch of more than 100 new events and were busy hiring teams to do it. The entrepreneurs are seeing the opportunity to launch more shows. That’s a very healthy sign.
How about the much-vaunted integration with data?
I think it works in some cases and not in others. One example is a business like Hanson Wade, which is in life sciences. During the pandemic, they launched a data business and now it’s quite big. But that’s a sector where there’s a lot of demand for business intelligence, and it fits very well with their events. Not everyone has the scope to construct that virtuous circle but clearly some do and are doing – stimulated by the pandemic and what has happened since. The truth is that, during the pandemic, there was a lot of talk about how we could all do data products. But, in so many cases, there are other people already doing that. We are good at putting on shows and focusing a whole industry for three or four days. Why would we necessarily be good at providing business information and data if five other companies have been doing that for 30 years? There is certainly more information and media activity by trade show companies but it’s an evolution in doing more for our customers – not a radical new business. It might just get to be 10% of some trade show-related revenues and could help to build-out an exhibition community. But it will seldom be the core product.
How important is geo cloning?
Most shows are national, in terms of exhibitors and visitors. It, therefore, only really works in sectors where, principally, you have an international exhibitor base which wants to market in a supra-national way. You could probably get to about a dozen sectors where geo-cloning works well, including tech, food, automotive. But almost none in America which is, after all, 45% of the whole market.
Probably the US-based Diversified Communications is one of the few US geo-cloners with their very successful Boston seafood show now also in Barcelona and Singapore. But, generally, geo-cloning, becomes more important in new markets – for example in Asia and the Middle East – where there’s a lot of cachet to an established international brand. And I think one of the really interesting trends that’s come out of the pandemic is the market shift to the Middle East..
What’s happening in Middle East exhibitions?
The Middle East is incredibly strong. And I’ve been there twice in the last month or so. Dubai is having its best period ever, Abu Dhabi is growing and Saudi is doing incredibly well. So there’s a massive shift of money coming into the Middle East where you’ve got great infrastructure and government support and – back to geo-cloning – a lot of the big exhibition brands are going into Saudi and other Gulf states. You only have to look at the traffic that’s going through Dubai, now the world’s busiest international airport to see how rapidly the opportunities are opening up there. For the first time ever, 60% of people going to Dubai are actually now staying in Dubai, not merely transiting which illustrates the shift of business as well as leisure.
What about the challenges of sustainability?
You’ve obviously got the exhibitors, stand building and the materials but that’s a relatively small part. The bigger parts are the venues and how they’re dealing things like logistics and transportation.
Travel is obviously a huge component of that. We’ve been doing a lot of studies in the industry about how you can go to an exhibition and see on average 10 people, which is saving you 10 flights. But the industry certainly has to get its message over about what it’s doing to achieve sustainability. because all the public-facing activity and strategies of large international companies might – if we’re not careful – may start to say that an exhibition is either good or bad, as simple as that. That’s the danger. A lot is being done and much more must be done but the exhibition industry is not very good at communicating. People’s eyes just glaze over but if you look at the annual report of Informa – the world’s largest trade show organiser – you can see there’s a huge amount of activity. It’s what investors expect, of course. Even for smaller companies, this will be crucial because if you want to sell your company, you might need to go through some kind of sustainability audit – or risk losing the deal. It might start to matter also if you’re negotiating for a bank loan,for example.
Easyfairs has recently been sold, but what of M&A generally?
Despite the strong growth and putting the pandemic well behind us, I have been surprised at the relatively low level of businesses coming to market. But I know, from a lot of conversations that there are a lot of businesses coming to the market, so we may see many more deals during the final quarter of this year and the first quarter of 2025. Obviously the doubling of the cost of capital has been a factor in that delay and it takes time for people and companies to adjust their expectations. But the M&A rush is coming. There’s a lot of private equity money trying to get into the sector and – currently – not very many opportunities, But it’s just a question of timing. Just wait.
What’s Cuil Bay Capital?
It’s my private vehicle to help entrepreneurs scale their businesses. Last year, I bought Raccoon in the healthy and outdoor market. This year, we bought Abilities, which is for the disability market. So we’ve now got a business which, in nine months, comprises 17 shows and some £10mn revenue. We want to do a couple of acquisitions per year where we can work with entrepreneurs and help them scale, but we will also do major launches. This is all about creating assets for three, four, five nine years down the line.
Secondly, I’m working with private equity firms which want to come into the trade show market. I expect to be co-investing with them in potential deals to build good businesses that, with the right amount of capital, can grow dramatically. Exciting times.
