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April 7, 2008

Nigel Nathan: M&A and the future of the entrepreneur in the exhibitions industry

The latest statement from the Department of the Bl**ding Obvious says that the events industry is cyclical, and that what we’re seeing now is what we’ve seen before and what we’re likely to see again. So far, so much a cliché.

The truth of the matter, however, is far less clear cut. The events industry is still, like it or not, youthful and – as evidenced by the continuing successes of the Events Industry Alliance (EIA) under Trevor Foley – is still fighting for recognition among older and more established marketing disciplines. The beginning of our industry’s cycle is easily traced back to 1986, when Blenheim Exhibitions went public.

A level playing field for great ideas

Up until that time – and forgive me, I’m generalising – the events industry was not only divided into subsectors taking in exhibitions, conferences, meetings, live events, parties et al, but it was also a playing field on which the creative entrepreneur was king. In those heady days, one man (or woman) had a brilliant idea, ran with it and created his (or her) own property (or properties), which either went from strength to strength and became a legend, or sank without trace. From these beginnings rose some of the great names that are now rightly recognised as the elder statesmen of our trade.

It was a cottage industry in many ways, and it was Blenheim which, through the systematic purchase of everything worthwhile among the small to medium-sized entrepreneurial players of the time, began the inevitable cycle that we see today. Blenheim was Pac-Man, gobbling up the smaller organisations and, in doing so, putting a stranglehold on the entrepreneurial spirit that had given rise to the industry thus far. They did such a great job, that there simply weren’t many small players left.

Then – and yes, I’m skipping chunks of history – Blenheim was acquired by UBM (1996), and from there, the small to medium-sized entrepreneurs sprang up again. What we now see is a circle of entrepreneurial creativity, growth of shows, purchase of shows by big (often publicly quoted) companies, organic growth of those properties and possibly brand extension, and then the rise of the entrepreneur again. To create a random agricultural metaphor, it’s seed, harvest, storage and seed again.

The circle of life

Generally, true growth and innovation can only come from the entrepreneur – the big companies won’t countenance it because it’s too risky – and the entrepreneur only surfaces when the big companies, in their organic growth and entrenchment phase, miss the opportunity, or pass it by. What’s interesting is that, as a result of this circle of life, the entrepreneur is now as likely to have come from a plc background and to have been bored or stifled, as they are to be fresh to the industry, bringing little but flair and a brilliant idea.

That’s the way it seems to be currently. Am I worried about it? Actually, yes, I am. As the cycle matures – and the more effective the EIA becomes – the more interest there is in our industry from companies with no event heritage or pedigree. The venure capitalists and the private equity houses have moved in, looking for a short-term bang for their buck.

They’re even less likely to countenance the risk that is necessary if we are to see real success stories like Ecobuild and the Thames Gateway Forum, and also less likely to let the good people (the possible entrepreneurs) leave the organisations they’ve acquired. And on a personal level, I’d rather deal with 200 mad entrepreneurs than I would with five pin-striped corporates focused solely on maximising their returns.

Nigel Nathan is chairman of the Events Industry Alliance and group commercial director of EC&O Venues.

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