Editor's Blog

28/09/2017
The urge to merge

Big mergers and acquisitions have been a common sight in the event industry of late.

Deals such as BCD M&E taking on Zibrant and Amex Global Business Travel acquiring Banks Sadler have hit the headlines, but there have also been a number of smaller deals between agencies. And that’s before you even get to the huge deals that have taken place between hotel groups, such as the formation of Marriott Starwood - and even large event tech companies joining forces. It’s all in stark contrast to the caution seen in the wider business community.

The recent flurry of mergers and acquisitions activity was up for discussion at the latest MPI Insights event, where Richard Bandell, independent corporate advisor and previously CEO and non-executive board director at Grass Roots (pictured) shared his thoughts on the trend.

“If it doesn’t benefit the client it’s a problem,” he said. “It’s about the same drivers that drive all mergers in any sector. The first reason that anyone does an acquisition is an economy of scale. In the hotel sector there are lots of economies of scale to be had.

“The next is geography. If you’re in North America and Asia, but not in Europe, there’s a gap there. Coverage is important." 

He added that hotels also see mergers as good way to extend their brands.

“We all want as many slices of the cake as we can get. The more you’ve got, the bigger your knife, the bigger the slices you’ll be able to get.

“They’re also buying brands. Relationships take decades to build up; they’re shortcutting how long it takes to set up a new brand.”

While this may be true of the hotel sector, in the agency world it’s a slightly different tale.

“It’s about pulling power,” said Bandell. “The bigger guys get the bigger commissions. And commissions are under enormous pressure. You used to be able to make 50 per cent on event operations if you had a great relationship with the client.

"These mergers are about bringing volume because that’s the way you can eke out a living. Big is beautiful in the agency world. Winning volume takes you years and years – if you ever do it. Building serious volume is not quick. To get that speed you need mergers and acquisitions."

He said that events are important as a way of changing people’s perception of a brand.

He said: "If you’re big or small, it doesn’t matter: you have to invest in knowing clients. You’re paid to give your clients a memorable experience, to create excitement. You just have to be really good at what you’re best at and not fret about it.

"Whether you’re an international hotel group or a boutique agency, the demand for the unusual is still there. The demand for new and individual properties in the UK is expanding dramatically. So carry on doing what you’re doing really well. Or sell. Because there are plenty of businesses out there that want volume.

“The smaller guys will sell because they’re worried about losing value. The money’s there. Big chains will continue to buy big agencies, that’s always going to happen.”

Bandell finished up by saying that it was most important for companies to invest in people.

“Don’t allow relationships to erode because you’re worried about what might happen. You have to invest like never before in those relationships. You’ve got a competitive advantage. Engaging and keeping the people is the competitive advantage.

“In the future, if they lose what makes the event communicate, they will lose everything. What are you going to do about the people? They are your added value. Work really hard on the people, because it’s the people that are important.”



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