Trade show producer Emerald Expositions LLC, a champion of face-to-face communication, appears to be thriving in the age of digital business models.
The San Juan Capistrano-based company runs a portfolio of more than 50 trade shows and about 100 conferences—nearly double what it had in 2013, when Toronto-based private equity firm Onex Corp. purchased it from Nielsen Holdings NV for $950 million.
Emerald’s sales are projected to reach $320 million this year—a 75% uptick over the three-year period.
“Everyone wants to know why the internet has not killed [our] business, while other things are being disintermediated,” said Chief Executive David Loechner, using a term that describes the process of removing the middleman from future transactions.
Emerald’s bread-and-butter are retailers that often make large wholesale purchases at trade shows and “tend to want to get it right.”
“When you and I buy something online, if we don’t like it, we send it back,” Loechner said. “But if Macy’s gets their trending wrong, and places a whole seasonal purchase against something they didn’t seem to get right, it’s catastrophic … Maybe the line sold through well last year, but maybe next year it’s a different style, a different trend, a different company coming up. You can meet the people and listen to their brand story and see how they’re going to be positioning their business next year. That’s why trade show floors are so dynamic.”
Emerald and other operators, in an effort to remain relevant, are collecting and analyzing data and using technology to assure attendees get the most out of their time at the trade show. Data also provide the basis for extending relationships with customers year-round, but communication is not a one-size-fits-all approach. Senior marketing executives who are Gen Xers—roughly in their mid-30s to mid-50s—might prefer direct mail and email, while millennials—20 to mid-30s—likely expect more tech-centric messaging and trade show components.
“Millennials are the current and future business generation, and so we’ve been working very hard at making sure our events are experiential,” he said. “They’re not your father’s convention where you go and you sit through a seminar, you shake some hands, and you go to a cocktail party and then go home. We try to have live demos, there are contests, and although [at the trade show] core is an exchange of critical business information and relationships, experiential is what people take away from it when they go back—was it hard to do, was it boring, was it dumb?”
Emerald also has introduced beacons and mobile apps tailor-made for a particular show that provide “exhibitor locators, notifications that you are near somebody that you’d like to see, or [an alert that] the keynote speaker is starting could pop up on your phone,” Loechner said. “It’s all to enable a time-efficient experience. Data monetization is not one of our core priorities. Use of data is to make sure we are primarily communicating properly to the right people at the right time and in the right ways …There’s no mass marketing anymore—we do very segmented efforts, speaking to people very specifically.”
Breakdown
Emerald generates 90% of its revenue from selling exhibit space and sponsorship slots to exhibitors, the remainder coming from about 11 print publications and 80 digital products that complement its show offerings. It owns, produces and markets events in 10 categories, including home; general merchandise and manufacturing; sports and apparel; design; e-commerce; creative services; licensing; healthcare; military and food. Approximately 37% of its 2015 revenue came from its top five shows, according to Moody’s Investors Service Inc. in New York: ASD Market Week, NY Now, and Outdoor Retailer Summer Market.
“We have a leading market position in every industry we operate in—we own 30 of the largest 250 shows in the United States,” Loechner said. “The next closest operator has 16. We do more trade shows in Las Vegas than any other trade show operator. We are also New York City’s single largest trade show customer.”
The company last month bought American Craft Retailers Expo from IndieMe Inc., bringing its 2016 acquisition total to six. It has one more deal in the works, which was about to close soon.
Loechner attributes a jump in sales in part to organic growth—some of its shows got bigger, and some implemented rate increases. It also developed and launched four events last year: ICFF Miami, Cyclofest in Charlotte, N.C., and Lueur Spring and Get Outdoors in New York.
But its biggest revenue boost in recent years has come from acquisitions. Emerald realized a 50% jump—about $100 million—in 2014 with a $335 million “bolt-on” acquisition of White Plains N.Y.-based trade show operator George Little Management LLC, according to Chief Financial Officer Philip Evans. The deal added 135 employees to Emerald’s roster of 420—about 90 at its headquarters in San Juan Capistrano—and upped the number of offices it has around the U.S. to 10. The acquisition streak continued in 2015 with four trade shows added —deals that helped bring sales to $307 million, an increase of 12% over 2014.
Those acquisitions and the recent buy of American Craft Retailers Expo has brought benefits of scale.
Emerald centralizes trade show operations—including finance and accounting, facility rental, hotel contracts, move in and move out of a show, and registration procedures—so it can run newly acquired properties more efficiently than the previous owner. An example: It plans to co-locate American Craft Retailers Expo at the Las Vegas Convention Center with its Antique Jewelry & Watch Show and The Jewellery Box, “a new curated event for high-quality, on-trend jewelry at affordable to moderate price points.”
The COUTURE show, an invite-only designer fine jewelry and luxury watch event, will take place at the Wynn Las Vegas during the same week in June, with free shuttle service for buyers between shows.
Future
Emerald’s expansion streak will continue this year, according to Loechner, who said the company will “consider anything that matches the criteria of our current portfolio, and these are No. 1 products in their market. They are sustainable and durable, they have growth capabilities, and they operate in industries that have strong market fundamentals.”
It also may become an acquisition target, or “potentially an attractive public company some day.”
“Onex has been a great partner of ours, because they don’t [pretend] to be in our business, and they have great insights to the M&A world and of leadership and growth,” Loechner said. “What the eventual exit for them will be at some point will be completely up to them. In my 30-plus years here, we’ve had six different owners.”
Loechner did point out that there are about a half-dozen “bigger companies that have a lot of trade shows in their portfolio.”
“We’re probably the only remaining U.S. trade show operator of scale, standing independently of a large, internationally based company,” he said.
The field started thinning out in 2014 when UBM plc in London bought VSS-AHC Consolidated Holdings Corp., better known as Advanstar Communications and the producer of MAGIC Marketplace in Las Vegas, for $972 million. U.K.-based Informa in September acquired Penton in New York for $1.56 billion in a deal that included 30 exhibitions, about 20 data and intelligence brands, and more than 100 print and digital publications.
Emerald’s price, would likely go up from what it fetched in the Nielsen spinoff.
“We’ve acquired 29 trade shows since 2013,” Loechner said. “Our sale price down the road or value is greatly enhanced over time.”
