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IT'S ALL IN THE TIMINGEN looks at current views on M&A activity, when is the right time to sell your show or business, what factors to consider when selling and how you can ensure you get the best possible priceFEATURE26 activity across the UK exhibition industry today is a far cry from the double-digit multiples and sensational deals of 10 or even fi ve years ago. In fact, several industry commentators argue recent M&A activity has largely been the result of the seller's distress or necessity, rather than blinding commercial success. While the 1990s were a seller's market, Imago Techmedia MD Hugh Keeble claims market conditions have given buyers the upper hand today. Although he believes the money is still there for the right businesses, multiples are largely sitting at 5-8 times earnings and are refl ective of the diffi cult position many exhibition owners are in.With stunted UK growth has also come a switch in focus to offshore acquisitions. Reed Exhibitions commercial director Nick Forster observed the local market for sales and acquisitions has been fl at for the past two years with few major deals done in the UK. Most of the organiser's acquisitions have been on fast growing, emerging markets such as Brazil and China. "Vendors in mature markets aren't selling because business is down, while buyers are being understandably more cautious," Forster said. "At Reed Exhibitions we have been focusing our UK activity on tidying up our portfolio." But while many big deals have occurred elsewhere, there is interest in UK exhibition businesses provided they offer demonstrable strategic and geographic growth. Just look at UBM's £50m acquisition of David Wood's sustainable business exhibition, Ecobuild. Here, we look at key considerations from the point of view of buyers and sellers. DETERMINING VALUEA business is worth what someone will pay for it. Sounds obvious right? However one of the biggest stumbling blocks is unrealistic price expectations.According to exhibition acquisition specialists Mayfi eld Media Strategies MD Steve Monnington, owners need to understand purchasers are becoming more sophisticated in how they determine value. "There are an increasing number of acquisition opportunities for purchasers and they expect sellers to be reasonable in their price expectations, otherwise they will move on to something that gives them better value for money," he said. AAs an example, Monnington outlined a UK business his company was asked to sell making a pre-tax profi t of £450k but whose owner wanted £10m. This represented an impressive 22x multiple. "His rationale was that he had been running the company for 10 years and wanted £1m for each year," he explained. "Unsurprisingly, no-one was interested and the business remained unsold. Competition over the years saw the business decline. If the owner had been sensible he might have retired with £3m rather than nothing."Although it's understandable to have emotional ties to your business, this clashes with the spreadsheet driven, analytical approach most purchasers take."The purchaser is primarily interested in the future whereas the seller is looking at his achievements in the past," Monnington pointed out. "The number of years the business has been established, the amount of hard work put in during these years and the profi t levels achieved in the past are of no relevance to the purchaser unless they underpin the strength of the brand, market leadership and future growth."For Reed, determining the sale price depends on a number of factors, all of which can impact future profi t, Forster said. These include the size, state and growth potential of the market the show serves, and the amount the buyer will need to invest to ensure future growth. Timing is another critical consideration for anyone looking to sell an exhibition, Monnington said. "There is often a strong reluctance to sell an exhibition while it is still generating good profi ts. However, if a top price is to be achieved it is essential to leave some good growth for the purchaser," he explained. "The optimum time to sell is when the show is well-established in its sector but hasn't yet reached the peak of its growth curve."Once the decision to sell has been made, the next decision is whether to sell before or after the show. Our experience is that the best time to start the sale process is about two months before the next edition. At this stage, the forecast revenue should be strongly underpinned by contracted sales. We generally advise our clients to sell just after the show takes place and to invite potential purchasers to see what they might be buying. This is an essential part of their due diligence." SMOOTH TRANSITIONThe sales process is not just economic. VCM Events CEO Henri Cash advised organisers to build a great rapport with all involved and do everything they can to ensure a smooth transition. He claimed there was no better feeling at a sale's conclusion than to feel all parties have won. In the past three years, VCM has successfully sold off several exhibitions including Broadcast Video Expo to Emap, Grass Roots Live to a consortium of industry buyers, and the Service Desk and IT Support Show to Diversifi ed Business Communications. "The only measure of success for a new owner is the ability to unlock future potential. It is important, therefore, that during the entire process one treats a potential purchaser as a business partner," Cash said. "This will ensure they fully understand every aspect of the show and can confi dently establish good relationships with the key exhibitors. This in itself requires a balance of skills as one doesn't want to appear over-eager to sell during the discussions, which may last many months depending on the timing of the next event." As an acquirer, easyFairs' main value criterion is the exhibition or business' ability to enhance its show portfolio in terms of content and format. "Our shows are all aimed at distinct professional and business communities working in industrial or commercial sectors," easyFairs UK and Ireland MD Matt Benyon said. "Our positioning is 'time and cost-effective trade shows' and our slogan is 'if only all trade shows were this easy'. Therefore, we are constantly on the lookout for shows that offer exhibitors and visitors excellent value for money and/or time. "Some of our acquisitions immediately suit the easyFairs format, others we transition into it over time. That said, some formats we leave as they are if that's what the market wants." Benyon used easyFairs' recent acquisition of StocExpo as an example of a purchase fi tting strategically with the company's existing European series Pumps and Valves. With around 160 loyal exhibitors and an adjoining conference, this is in profi le from a size and format perspective, he said. Like most other UK organisers, easyFairs is also particularly keen on show concepts it can develop and introduce into new geographies - in other words, geocloning. "From an economic point of view, we are looking for a good return on our investment, but we take the medium- to long-term view on this," Benyon added. While there are plenty of practical steps you can take to better the sales process, gearing up specifi cally to sell without adequate focus on running a successful business in