Exhibition News January 2018 - Page 35

great confi dence as to whether it’s a show that’s going to be sustainable in the long run. Normally buyers like to see at least three years of historic information, to actually show the business has grown and established itself in the market. But if someone is selling a show that’s been around for 20 years and is still very small, the potential buyers will want to know why it hasn’t grown. Timing is important. In order to achieve a high multiple, the seller needs to leave growth in the business for the buyer. Entrepreneurs are not very good at doing that - they delay selling because they think, “I can earn a whole load more money next year and the year after and then I’ll sell”. However, if the profi t starts to plateau then it’s going to be worth less. Most exhibitions that people sell have been running for a minimum of three years. Having said that, we have sold a few after the fi rst edition and the sellers have done very well out of it, so every rule has its exception. TIP: If your exhibition has a strong growth profi le and you want to sell, don’t wait those extra years as a number of things outside your control could adversely affect the business. You can always sell earlier and negotiate an earn out based on future growth. Entrepreneurs can make life changing money by selling their exhibition business as long as they sell at the right time and take care in choosing their buyer. EN valuation FEATURE • The size of the business – Although acquiring a business with critical mass was a lot more important to purchasers a few years ago most are prepared to pay a higher price for size • The country of operation – In the past, countries such as Brazil, and Turkey were experiencing high multiples due to the strong competition for a limited number of opportunities. Following economic issues in many emerging markets, the more stable economies such as USA and China are at the forefront when it comes to high valuations • Content driven events – Strong content attracts high level visitors which in turn attracts important exhibitors. Exhibitions in the technology, healthcare and other education driven sectors that excel at content will always attract a higher valuation than those which just sell stands • Who the buyer is – One of the biggest variables in offers for businesses is who the purchaser is, as strategic fi t plays a large part in valuation. If we receive four offers for a business, the highest offer is usually double the lowest offer. • Market position – A rather obvious one, but market leading shows will always attract a higher value than secondary shows, in the same way that vertical shows will be valued more highly than horizontal ones • Portfolio risk – A single show is likely to be valued at a lower multiple than a portfolio of events because of the higher risk • Portfolio mix – Physical print products are much harder to sell than exhibitions and, because of generally declining revenues, they attract lower multiples • Maturity and growth attributes of the business – The fact that your exhibition has been running for 25 years with little annual growth is not usually a strong selling point. Early cycle shows with strong growth will be easier to sell at a good price THE NAME IN EVENT HIRE CW Plant Hire.indd 2 19/08/2016 15:19 exhibitionnews.co.uk | January 2018 35