Private equity knows trade shows and trade publications, obviously. And more frequently, these two specialized entities are providing more than just opportunities to check in on the competition and make new contacts. They are a source of deal flow.
Late last month, Apprise Media LLC, a media investment firm financially backed by Spectrum Equity Investors, agreed to acquire Canon Communications LLC, a business-to-business producer of print publications, trade shows and digital media in the medical arena. The selling party, New York-based private equity firm Veronis Suhler Stevenson, did not retain a financial advisor for the transaction. Financial terms were not disclosed, but Buyouts has learned from a source close to the deal that it is valued “in excess of $200 million.”
Canon’s 15 trade shows, 15 magazines and eight online properties focus on markets such as medical device manufacturing, allied packaging, plastics and electronics. The company’s major print titles include Medical Device & Diagnostic Industry, Medical Product Manufacturing News and Modern Plastics Worldwide, while its trade shows include the Medical Design and Manufacturing and PLASTEC series. Financial details of Canon were kept under wraps, though one report indicated that the company’s 2005 revenues are expected to reach about $60.5 million with an EBITDA of about $16 million.
When combined, the markets Canon serves are worth about $200 billion, so investing in a market leader in those niches represents a lot of growth opportunities, Charles McCurdy, chairman and CEO of Apprise, told Buyouts. “In print, Canon has a 75% market share and they have a majority share on the trade show side as well,” he added.
Trade shows generate a minority of Canon’s total revenues but, due to their low operating costs, provide a majority of the company’s EBITDA. Conversely, McCurdy said, publications are responsible for a majority of the revenues and a minority of the EBITDA.
Apprise plans to use Canon as a foundation in B2B media and will build the platform by acquiring like-minded companies and publications. But while growth through acquisition is high on Apprise’s list for growth initiatives, the company has already built up strong momentum from tack-ons made by Veronis. “We will take advantage of the existing organic growth and use it as an operating base to expand into related areas. I think we’ll see growth on a number of fronts,” McCurdy said.
“I think, broadly speaking, the B2B media market bottomed out in the middle of last year, so it’s a good time to be buying into the sector,” McCurdy added. “The recession of 2001, 2002 and 2003 resulted in a substantial decline in trade advertising revenues. But statistics are showing that as of the third quarter last year, advertising in B2B has increased.”
For Veronis, which held Canon in its VS&A Communications Partners II LP fund, the exit represents the end of more than eight years with the company. Veronis acquired Canon in November 1996. At the time, Canon produced nine trade publications with a total circulation of 158,000. Core add-on acquisitions made by Veronis include Abby Communications and certain assets of O&B Communications, which added Injection Molding Magazine, Injection Molding International and Pharmaceutical & Medical Packaging News to Canon’s list of publications. By mid-1998, Canon had about 247,000 subscribers.
Apprise Media was formed by McCurdy in January 2004 as a strategic management and investment firm in the niche media and publishing space. In April that year, Spectrum committed between $175 million and $200 million to Apprise from its vintage-2000 Spectrum Equity investors IV LP, which raised a total of about $2 billion.
Target: Canon Communications
Buyer: Apprise Media LLC
Seller: Veronis Suhler Stevenson
Legal Counsel: Apprise: Simpson Thacher & Bartlett LLP; VSS: Proskauer Rose LLP
Accountant: Deloitte & Touche