HEAD TO HEADManaging expectationsEN asks three exhibition organisers with a history of acquisition: How do you reduce the risk of post-acquisition failure?Matt Benyon MD, Easyfairs UK anD irElanDIn the last year we've seen impressive growth for Easyfairs as a business. Much has been organic, but an increasingly large contribution has been from acquisition. A major purchase for the group in 2010 was of B2B exhibition organiser Fairtec in Belgium, which has been integrated into the Belgian office. There were also a number of individual exhibition acquisitions, such as Business North West, Business Midlands and IFEX in the UK and SHOP in Ireland.The key to making acquisitions a success and minimising the risk of failure is having a clear but common-sense approach. You can't simply make the purchase and walk away, rubbing your hands with glee. Firstly, it is highly advisable to tie the seller into the show in some way post-acquisition; they will have valuable knowledge about the portfolio and relationships in the market to tap into. Whether it is on an operational, marketing or sales level, or as a consultant, they can continue to make a valuable contribution in the early days. For example, if the seller has a strong sales team on the event, we would look to integrate those people to maintain continuity.Additionally, as relationships are vital to ensuring the success of any venture, we ensure the seller introduces us to all key stakeholders and spends a good deal of time on this aspect. You also need to be acutely aware of how the marketplace might respond to a change of ownership; people can be distrustful and therefore resistant to change. The Easyfairs strategy is if the show is doing well, don't change anything - at least in the first year. It's the age-old philosophy of if it ain't broke don't fix it - this is very true when it comes to acquisitions. Additionally, if the market is wary of new ownership, introduce the new brand slowly and be responsive to external perceptions. Finally, and crucially, a strong non-competitive clause should be built into the purchase agreement. The seller should not be free to set-up a competitive business or exhibition with the profits of their sale that could undermine the value of your purchase.SiMon FoSterCEO, UBM livEIt sounds like a simple thing, but you have to put the acquisition at the top of your priority list. It's not just about the post-acquisition ramifications - you have to think about how you're going to integrate that purchase into your business and what challenges you will face even before you think about making an offer. When it comes to negotiations and due diligence, it's not just about the company's financials but also the influencers on that deal. Integration planning makes all the difference to an acquisition's success or failure. At UBM we have a checklist and programme we go through every time. It covers not just the obvious things like integrating systems, but also focuses on the key people and staff structure in that business we are acquiring. You also have to look at what to do with the various offices and communication programmes you might face. There are two main things that contribute to an acquisition falling over. One is a lack of planning beforehand and underestimating the size and scale of integrating a purchase once you've acquired it. The other is the lack of focus on the people and culture. In the exhibition industry, we talk about brands and data, but the strongest parts of our businesses are the people and the relationships they have with the market, associations, suppliers and customers. Most acquirers don't recognise the importance of retaining these relationships and listening to what those staff have to say during and after an acquisition. We are usually the biggest company in an acquisition but we're careful to make sure it's a merger, not a takeover. Part of this is respecting and integrating the cultural aspects that make those people tick and help that business to be successful. It comes down to identifying the staff, getting to know them and securing them. There will be things they do that are part of the value of what you're acquiring and if you impose on those things, you risk losing a big chunk, if not all, of the value of the acquisition. DaviD Gallacher-olSSon intEgratiOn ManagEr, ClariOn EvEntsMy suggestion is to include the senior management from both the acquiring and target businesses as stakeholders and have them agree clearly defined outcomes.At Clarion Events, we look to integrate our foundations - these being finance, sales order processing and IT. These offer our acquired businesses the freedom to adopt their own sales and marketing tactics. This is a strategy that has been successful. One example of these outcomes is for all parties to have visibility on sales and finance data and in turn, be able to report sales and cash flow forecasts in an individual way.The key to a successful integration is to agree outcomes, manage expectations, have a detailed plan and drive through change with as much speed and grace as possible.The greatest risk of post-acquisition integration failure is not taking into account the culture of the target business and how it impacts on the current group dynamics. At Clarion we look to acquire companies that have a similar culture to us. In terms of international integration, it is also important to focus on the culture of the country. Failure to understand the cultural impact on all aspects of business practice will quickly derail a project; you have to accept there are some things you simply cannot or should not change. Our approach in that instance is to take time to listen and learn. A recent example is the network of accountants, lawyers and UKTI trade managers we have made in Istanbul - a new territory for most of us at Clarion.The timing of any project is open-ended with the majority of change to take place in the first 90 days after an acquisition. Finally we are a people business and the cost of intervention can weigh heavy on the target company's team. If you listen, build trust and share our passion, then the project should be a success. www.exhibitionnews.co.uk 21FOOD FOR THOUGHT
BACK TO BASICS22 www.exhibitionnews.co.ukTO HAVE AND TO HOLDGreat things grow from strong partnerships if you choose the right partner for the right reasons. Here, EN looks at the basics of both forming and ending joint ventures hen breaking into a new country, market, or getting a launch show off the ground, competing companies often look to set aside their differences and partner up in a joint venture (JV). A partner can give you the local market nous, or operational support you lack to establish an initial presence, while also providing fi nancial capital or well-established brands that can enhance your existing portfolio. Mack Brooks chairman and CEO Stephen Brooks knows something about JVs. In one of the biggest partnerships to be announced in 2011, Mack Brooks joined forces with Emap to take the UK-based company's highly prized exhibition brands into international markets. According to both parties, Mack Brooks' international expertise will help Emap break out of its UK-centric footprint."I think the two most important things to engender when creating a JV are as follows: First, that there is equality between the two parties," Brooks explained. "If one party is contractually junior to the other, it is not a real or effective partnership in my eyes. Second, both parties need to be clear on why they need each other, now and in the future."CONTROL AND AUTONOMYHowever, before you try to work out which partner to choose you need to make sure a JV is the best possible track to follow. MD of Single WMarket Events Tim Etchells often prefers the licence deal, which gives one organiser a greater amount of control and autonomy."You have the right to use the name and all the marketing collateral, for example the logo and website images of a show," he said. "The benefi t of a licence deal is it's linked to turnover. This way, you don't have a partner saying you shouldn't spend on marketing. That's why I personally prefer the licence route. I just pay them a percentage of turnover, so if I lose money it's my concern, not theirs."Etchells pointed out the combination of the varied strengths of two companies can make breaking into a new market more effi ciently and successful. One party could have the infrastructure, while the other has the market knowledge. As important as it is to know when to enter a JV, it's just as important to recognise when it's time to part ways. Etchells compares a JV to the space shuttle: It uses the power of an external fuel tank to leave the atmosphere, but once it's fulfi lled its function the tank is jettisoned and the shuttle continues on its own power. "When one side isn't bringing anything to the party anymore it's time to part ways," he said, adding that a good way to facilitate Carefully balance the work between parties. Find partners with complementary strengths such as marketing or sales skills. A three-year buyout option will help avoid issues and give you an exit plan. A licence deal can give you more autonomy. Look for partners with a compatible business culture to yours. Prepare to disband the JV when contributions become unbalanced.KEY TIPSthis is to include a three-year option for one party to buy the other. "Getting a lawyer that understands the event business to draw up your contract is a good idea," Etchells said. "You need to trust each other and there needs to be a like-mindedness. There are different cultures in the way you run your business. We are fairly lean and mean with our overheads but if there was a company that wanted higher overheads there would be tensions."TRUSTWORTHINESS While autonomy is important, BBC Haymarket Exhibitions MD Laura Biggs pointed out that it can only be achieved with trust."We've had over 20 years of experience bringing BBC brands to life so we have the autonomy to deliver the shows, and we have the respect and understanding from our colleagues at the BBC to trust we will deliver a fi rst-class production every time on their behalf," she said.Collaborations between BBC and Haymarket include the BBC Good Food Show, BBC Gardeners' World and BBC Good Homes Live. With both parties bringing different strengths to the table, a shared vision and open channels of communication, a JV can be a strong leading edge for companies to cut into a new region or market. Just be prepared for a clean break when the time comes.