Three things to do right when investing in B2B Event businesses
Recently, several analysts acting on behalf of Private Equity firms looking to invest in B2B Event businesses have reached out to me. Now, that's not my primary area of expertise, but even I would say something is up. Whether it's "troubled assets" or a "recovery scenario", one thing we can be sure of is that more PE money is circulating in our industry than ever before; As far as I remember. Depending on the size of these PE homes, they may be chasing after some of the biggest names in the public space, considering lending more money to existing PE-owned organizers, or working with established industry executives to go on a shopping spree to build new buildings. businesses from scratch.
As part of these exchanges, some thought-provoking questions (as anyone interested in investors will understand) and incredibly stupid questions (just like that) were asked. Leaving the obvious financial, business, and legal ones aside, here are my three favorite answers to the main question I was asked:
If you were currently investing in an events business, what would you look for?
No surprises here. I remember a SPA we signed (as a vendor in 2011) there was a clause that said data and databases that allowed trading would be delivered after a CD, and that was pretty much the only reference. Maybe that was enough for this deal 10 years ago, but now those days should be a thing of the past and we should remove the "We can't ask them for their data" stamp. I bet we can. This is the basis of the business we buy. If I were on the buy side today, I would get a third party to ask the target the following questions:
How many people have you lost access to due to the pandemic job loss, and what have you done to restore access to accounts where you only have one? I know this is a bit verbose and boring, but one question can tell you a lot about the team you're investing in.
While you're at it, here's a non-exhaustive list of data metrics I'd love to use as part of my bargaining strategy:
What is the contact-to-account ratio for participants? (in plain English, how many people do they know about their clients and prospects?)
Are your customers' products/services adequately tagged in your CRM? So what is the average product per customer? (simply, do they know what their customers are actually doing?)
Do you have a data quality metric? What does it consist of? Innovation? completeness? Another? (read: do you really care about any of these things?)
A short personal advice, get short answers just for these. Forget long-winded explanations.
2- Digital Talent, do they have it?
Now that we have a rough idea of where they stand in the face of data capabilities, I think it's time we insisted on a minimum level of digital literacy in key Leadership positions, starting at the top. The FD -> CFO -> CEO route that prevails in our industry has proven incredibly successful for times when organic growth is just over GDP in single digits and actual job growth is sustained inorganically.
But times are changing now and we need the best managers to search in areas that may be a little beyond their current skills. The hottest topics in our industry: Digital revenues, data management and virtual/hybrid require digital expertise to both define and execute the strategy. I'm investing my money in more Digital Talent to get into boardrooms fast.
On this topic, as part of my humble contribution to Denzil and Marco's book Re-inventing Live, I proposed a checklist for digital preparation. You can find the full list in the book, but here's what I would insist executive leadership (at least) take care of:
Is there someone in charge of digital who isn't your Head of IT and doesn't report to the IT function? Do they have a team? To whom do they report?
How often do you meet with your marketing chief? Is he sitting at the marketing board desk? Who does marketing report to? And most importantly, is marketing a cost center for you?
Are you on your marketing seed list? (meaning: do you get all your outgoing email marketing?)
