Analysis
Would ‘Big’ provide competitive advantages, or is ‘Small’ the highly
flexible smart speedboat outmanoeuvering the large tankers?
(2018), and also PSAV (2018). This places Blackstone at all levels
of the value chain in our industry, i.e. from venue ownership and
management, to organising events and providing services.
Arguably, Blackstone could be seen as one of the top companies
in terms of turnover in our industry; however, does size in this
case result in similar competitive advantages as in the Informa/
UBM deal? I have my doubts.
Firstly, it can be assumed that the venue and the service
business (IMC, NEC, PSAV) will not be merged with the organising
business (Clarion, Global Sources, PennWell), making synergy
effects between these lines of business unlikely.
Secondly, a merged organising business may result in a number
of synergies, e.g. by leveraging selected verticals or in the areas
of digital, data and AI. However, Clarion is regionally highly
diversified with activities in many different sectors and I expect
more consolidation than leveraging of positions.
Leveraging Global Sources events will hardly be possible
and, in addition, a decision must be made with regard to the
company’s online business. PennWell events are mostly highly
specialised verticals, but a regional diversification will have
limited effects on the P&L of the combined group.
In case of the various Blackstone acquisitions, therefore, I do
not believe that size matters such that it will provide competitive
advantages to the group.
vs.
Last but not least, it is worth reviewing the recently announced
merger between AEG Facilities and SMG, both companies
engaged in the management of venues. The move creates a
leading facilities management and venue services company
globally.
It remains to be seen whether size in this case will matter;
I expect the combined group to realise some cost synergies,
improve performance by adopting best practices and enhance
innovation across the board. Additionally, I see synergy potential
in a cross utilisation of areas like F&B and/or facility and property
management.
On the marketing and sales side I do not see much potential for
synergy; on the contrary, additional complexities may arise from
the integration of the AEG Ogden assets into the combined group.
In summary, that merger seems to target a cost driven margin
increase in a low margin business with little upside on the
revenue side.
Conclusion: Does size matter? It depends!
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Issue 2 2019
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