Kathleen Thomas joined Berkery, Noyes & Co. LLC in 2003 from Veronis Suhler Stevenson, where she served for nine years specializing in mergers and acquisitions advisory in the business-to-business communications segment, with expertise in magazines, newsletters, trade shows, conferences, seminars and the outsourced services that support these businesses. She has been instrumental in the successful completion of more than 50 transactions, including the Forstmann Little investment in ENK International, the sales of McGraw-Hill's Healthcare Information Group, Boucher Communications to Wolters Kluwer Health, National Roofing Contractors annual trade show, MedQuest Communications, Expoexchange trade show services, Asset Alternatives publications & conferences, Mealey's Publications & Conferences, among many others.
In addition to her sell-side representation, Kathleen has very deep buy-side experience, advising Hanley-Wood in the acquisitions of Surfaces, NSPI, and Remodelers trade shows, Journal of Light Construction, Pool & Spa, Aquatics, Multifamily Executive and Public Works magazines, among many other buy-side assignments.
Q. We’ve decided to sell our show. Should we consider scaling back our marketing efforts? A. Answered on 10/9/2008.
Typically a buyer can ascertain whether or not marketing has been cut inappropriately in the due diligence process. This could impact valuation if the buyer believes that the cuts will negatively impact revenue growth when he takes over the event. You don’t want to give buyers the impression that you’ve “dressed up the business for sale.” However, it does make sense to look at your cost structure and make sure you’re operating as efficiently as possible to maximize profits.
From
Bill in Las Vegas, NV on 5/27/2008
Q. We’re planning to acquire a company that will strengthen our offerings, but also has a business culture that’s different from our own. How can we help integrate this new business culture to form one cohesive team? A. Answered on 5/27/2008.
After the courtship comes the organizational marriage. Cultural integration is one of the key factors that can determine the success of a merger or acquisition. Working to integrate different cultures and workforces involves more than organizational entities — it includes employees, systems, customers, and many other stakeholders.
This starts with an early understanding of cultural differences and processes. Each company should be coached to examine how the practices of the other company could be beneficial to the new entity. Conducting cultural due diligence early and determining and understanding cultural compatibility and potential non-compatibilities with the target firm is highly important. This, in conjunction with establishing an integration team comprised of employees from both the acquiring and target companies, will also ensure success.
Most importantly, any M&A activity should be presented to employees as good for the organization and for themselves rather than as a time of uncertainty and turmoil. Focusing on the human dimension of M&A will significantly impact the success of a transaction.
From
Andy in Philadelphia, PA on 8/2/2007
Q. What is due diligence? What exactly will the potential buyer be reviewing? Who does it and how much does it cost? A. Answered on 8/2/2007.
Due diligence is an investigation or audit of a potential investment or acquisition, and it serves to confirm all material facts with regards to the sale. Due diligence includes an operational, financial and legal audit, and it refers to the care a reasonable person should take before entering into an agreement or a transaction with another party.
Due diligence often includes:
- A review of business operations, which ranges from reviewing marketing and advertising strategies to analyzing IT systems, vendor contracts and other key contracts;
- A financial review, which includes an examination of the company’s books and records, as well as accounting and bookkeeping methods;
- A review of employees, including their skills, experience, and compensation; and
- It may include customer reference checks.
Your investment banker can help you prepare and compile the materials to be used for due diligence as part of their advisory services. There's no hard and fast rules on timeframes for due diligence; however, the more prepared a seller is to answer a buyer’s questions, the faster and more efficient the process. The costs associated with due diligence are customarily borne by the buyer; however, the seller also incurs some costs in assembling and providing access to the diligence materials, such as online viewing of materials or providing print copies of materials.
From
Amanda in Baltimore, MD on 3/28/2007
Q. We don't want to sell our entire company, but we would like to find some investors to fund an expansion. How would you recommend finding investors? Is this something investment bankers can help with? A. Answered on 3/28/2007.
The trade show industry is attractive to many different types of investors, for many different reasons. Broadly speaking, there are two types of investors: strategic and financial. While both are motivated by financial gain, the strategic investor is typically a company that’s already active in the industry and is looking to invest in growth, either horizontally or vertically.
Strategic investors have management in place and can help you capture economies of scale by eliminating redundancies in the organization. They typically operate on a longer investment horizon and can often assign higher values to a business, but you may have to surrender more day-to-day control.
Financial investors tend to rely on existing management to grow the business, leaving more operational control with existing management but could be more impatient to see a return, as they have finite exit horizons.
Lately, we’ve seen financial-strategic hybrids that blend characteristics of both. It’s important to consider the various forms of investment available, from leveraged recapitalizations, including mezzanine financing, to convertible debt to minority or majority equity investments. An investment banker with experience in the trade show industry can help you model the various alternatives and introduce you to the types of investors most suited to your goals.
From
Bob in Chicago, IL on 12/7/2006
Q. Good Afternoon Ms. Thomas;
I am currently working with a financial investor to launch a new company within the exposition industry. We are focusing on the B to B and B to C show concepts. We are in the process of evaluating the pros and cons of Buy vs. Build – Acquisitions vs. Organic Growth.
In your opinion which strategy would you recommend? Buy vs. Build and what are some of the pros and cons?
Thank you for your time and consideration.
Bob A. Answered on 12/15/2006.
There’s no objective solution to the buy vs. build conundrum. Sooner or later, every company in pursuit of growth must solve this puzzle based on its own unique circumstances. Chief among those circumstances is time: How long would it take to build the business from scratch, and would the window of opportunity remain open long enough to get the operation (or product or service) up and running? There’s a significant time-to-market advantage in acquiring a going concern, provided there's a suitable asset available and integration issues are manageable. If there’s a business you can acquire, ask yourself: Does its performance, competitive positioning, quality of staff, brand strength and other attributes justify the price you’ll have to pay to persuade the owner to sell? Shaving months and years of development time might justify a higher valuation, as would the lower perceived risk in purchasing a business with a proven track record vs. the uncertainty of a start-up. Most larger companies decide in favor of buying vs. building, which tends to move the needle further and faster for them. While entrepreneurs tend to be builders rather than buyers, providing the businesses to fulfill others' buy strategy.
Legal disclaimers:
This forum is for information and discussion purposes only. It should not be used as a substitute for professional advice from business advisors who know your individual business. We do not guarantee the accuracy, reliability or completeness of any information provided by this forum.
The answers and opinions provided by this industry expert do not necessarily reflect the opinions or policies of EXPO magazine or Ascend Media LLC, nor is an endorsement of this company’s products or services implied.
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