The ups and downs of M&A in events

William Kuipers, CEO for B-Concept Media Entertainment Group, had a stroke of luck when BCD M&E came knocking on his door in August last year looking for an events management partner. A deal was struck, leading to B-Concept consolidating its meetings and events business with BCD M&E and Kuipers taking over operations in Thailand.

Such a strategic move is not uncommon among global event agencies and DMCs such as BCD M&E that are establishing their footprint and market share. In this case, the partnership allows BCD M&E to leverage end-to-end event management in Thailand where it had previously been more involved with the sourcing and supply of hotels.  In the meantime, smaller companies like B-Concept can be better positioned when partnered up with a global name.

“It’s an interesting adventure and I like it. [There’s been] fast-growing resources, a lot of interesting portfolio and customers… a lot going on,” says Kuipers. The partnership came at an opportune time as he had wanted to create a separate entity for B-Concept’s meetings business to set it apart from its brand activation and digital offerings.

“We can clearly see business [opportunities] to separate MICE from consumer events and brand activations. [It provides] more clarity to customers,” says Kuipers.

Strategic partnerships

Better positioning aside, smaller companies also look to bigger players for funds and an exit strategy. “Small companies need support because they may have strong relationships and a strong know-how, but they lack resources to maintain cash flow during times of strategic positioning,” says Guy Paillard, founder, director of brand strategy and technology, Imagindustries.

He speaks from experience, having set up The Imaginators, a joint venture with Pico in 2017. The partnership dissolved after a couple of years.

Increasingly, smaller companies with speciality skillsets are good investment targets since larger networks in the experiential events segment are keen to acquire new technical capabilities. For instance, Creative Technology acquired Hong Kong-based Avollusion last year to increase its AV production assets for live events in the local market

Nevertheless, Paillard cautions against chasing after what he calls the “flavour of the month” or overvalued investments, given that tech trends evolve fast. Daniel Seyferle, chief creative officer, SMS Group, agrees, saying that agencies should understand how tech works to avoid “limiting” themselves in their tech acquisitions.

“If you plan to take that capability in-house, you are almost obliged to go with whatever the shop is specialised in, and that robs you the flexibility to go out and work with other shops that are your natural partners,” says Seyferle. “In the end, it’s a question of commercial viability.”

He suggests that content agencies can be better partners since events have become more content-centric and agencies are often required to work on content with different scales and formats.

Meanwhile, the market has also become more fluid with advertising holding companies entering the events sphere. One high-profile acquisition was Dentsu’s 69% stake in Branded which produces the YouTube FanFest, It’s a Girl Thing and All That Matters. The agency integrated the company into MKTG, the group’s lifetstyle marketing agency.

Greg Paull, R3’s principal, expects this trend to continue in 2019. “Experiential is increasingly a critical factor of the marketing mix as consumers look to high touch and engagement,” he says. “Holding companies are going to feel pressure from their clients to expand on these sectors. We’ve seen a lot of M&A in this space over the years in China and we expect this to expand to other markets.”

Friction between partners

While clients’ demand for integrated solutions remains one of the main drivers of M&A activity in the industry, consolidation may not always have the best outcome.

Imagindustries’ Paillard says his earlier association with Pico had not necessarily helped open more doors for his agency then. In a sector such as live events, Paillard says competition is rife within larger networks that have many similar subsidiaries competing for the same account.

On the other hand, companies that buy out their competitors may lead to homogeneity in solutions. Paillard believes that such concerns may motivate clients to look for solutions from independents while a few have started calling for blind pitches, a practice that offers competing agencies better chances irrespective of their positioning in the market.

Some challenges also lie in post-merger integration. Paillard says that differences in working culture was one of the reasons that led to his failed joint venture with Pico. “When you are not partners, everybody wants that vision, you talk the talk… but as soon as you are in that situation, it’s very hard for us to change [the mindsets of] large organisations [in line with] transformations that are occurring in the market,” he says.

For smaller companies that are venturing into acquisitions, however, it is always better to have a wait-and-see approach. B-Concept’s Kuipers says smaller-scaled companies should hold back and examine the projects on their pipeline instead of making acquisition for acquisition’s sake.

The one thing he always falls back on before making investments is his CFO’s advice. He says: “If it’s not the right case, we will hold back; there has to be a right time for it.”