Outside money is gobbling up our industry. Attracted by the high profit margins and strong growth of the trade show industry, the "Wall Streets" of New York, London, Amsterdam, and Tokyo are providing capital to publishing companies and venture-backed entities to acquire publishing and trade show properties. These "Wall Street" funded acquisitions are changing the basic structure of our industry and the way we do business.
What's taking place is called a "roll up." Small companies and properties are being "rolled up" into fewer and larger economic units, and these organizations are increasing their share of given market segments--and building their relationships with advertisers, sponsors, and exhibitors--through integrated marketing programs that tie together publications, meetings, and trade shows. Increasingly, the largest 200 trade shows are being produced by for-profit producers instead of associations.
Here's one recent example: The Environmental Industry Association recently announced the sale of it's Waste Expo trade show and Waste Age publication to PRIMEDIA Intertec, a venture-backed media company. Lawson Hockman CEM, EIA's chief operating officer, says this transaction will provide a broader range of services and capabilities to the association in its publications, trade show, and educational offerings to the membership. It will also provide an immediate increase in the association's reserve funds, as well as revenue sharing into the future.
While this may very well be an excellent strategic move for EIA, other association shows that have been sold have not fared well. In one case, an association show that had been sold to a for-profit company was severely hurt when a core group of exhibitors decided they didn't like the new ownership and split off to form their own event.
I believe associations are especially vulnerable when it comes to acquisition issues. Venture-backed companies are well-funded, market-share oriented, and they make decisions quickly to take advantage of market and financial opportunities. When they see a strategic buy, they go after it. Associations, on the other hand, traditionally do not move fast when it comes to governance issues, nor are they particularly proactive in creating comprehensive, integrated strategic development programs to preserve market share and income streams. Today we have professional buyers and amateur sellers, and that can spell trouble.
Competitive survival for your association and its assets requires a well-researched strategic game plan. It requires more professional focus on membership development, audience relationship building, and loyalty development. And yes, it may require a contingency plan to sell your event or to create a joint venture with an outside organization--because that may be a viable strategy for your association. The point is be prepared, or beware. The acquisition trend is just beginning.