Exhibitions business CloserStill Media has grown significantly over the last four years, including successful expansion into Asia, Germany and the US. In 2015, Inflexion’s Partnership Capital Fund acquired a minority stake in the business to help accelerate the firm’s international expansion through acquisition and rolling out of existing UK exhibitions internationally. We sold our investment in 2018. We talk with Chairman Philip Soar and CFO David Packford about the nearly four-year partnership.
Growth during Inflexion's investment
DP: Once you have quality content, the exhibitors and delegates come. This has underpinned our growth, which was mostly organic and driven by launching new shows off existing ones. The shows start small and grow as they mature. We also increase price and footfall, which helps grow the shows.
PS: Around three-quarters of our growth has been organic. If you look at certain metrics – revenue per exhibitor for example – we’ve been growing it by around 11% per annum and that works well. We do it by making the experience better. The area isn’t particularly price sensitive, unlike magazine publishing where pricing is crucial.
Overcoming growing pains
DP: The business encountered typical growing pains, with the back-office unable to keep up with the front office. It took 3 - 6 months to remedy the finance backlog once I came in to try and help improve the finance function in 2017. We now have systems that work and people that can drive them so it’s working well. The business was then able to re-focus on growth, and international M&A was a big part of that. Much of our growth over the last 18 months was driven by international M&A. Inflexion really helped us to professionalise the M&A process by helping us bring the opportunities to lending banks, which was very helpful.
PS: We’ve made a large number of acquisitions in 18 months at an average multiple of 4-5x, which is very good given our own exit multiple is 16x. It’s because we understand the area and how to improve it and we are good at finding those opportunities.
Inflexion were very helpful in Hong Kong. Inflexion’s Xuan Ye, in the Asia Pacific region, was crucial in bringing in Alibaba as a contact, since local help is necessary there. Our whole business in Hong Kong is now run by a team of local Cantonese, and that was largely supported by Xuan.
By the end of 2019, around half our revenue will come from outside the UK. I imagine in two to three years this will rise to c70%. A big show for us is the Vet Show. We have seven around the world, and hope to double this by 2020. The model is straightforward to replicate owing to the content matter; dogs and cats are the same everywhere. Therefore what will work in terms of content, lectures and training in London will work in Singapore, Tokyo, New York, Paris Cologne etc. We have a brand with content we can move to a lot of locations. We’ve done the same with Learning Technologies, which started in the UK and now has grown to seven shows around the world and is set to expand further. The people who speak in one location will speak in others. We’ve tended to choose the brands which will travel; it’s driven much of our growth.
DP: Every private equity house has its own style and all have a different level of being hands-on. Inflexion have a healthy balance of not looking over management’s shoulder, but equally they’re always there at the end of the phone. They’re there when you want them as well as monthly in the boardroom, where they’re good at helping the management team prioritise.
Inflexion have a healthy balance of not looking over management’s shoulder, but equally they’re always there at the end of the phone.
PS: Its always been a friendly and straightforward relationship. As a minority investor they were aware of how they should act in board meetings.
DP: I didn’t tend to notice that they were a minority rather than majority investor. They had equal weight in many ways owing to their experience and level of questioning as well as and foresight and encouragement – all the things you’d notice in a majority institutional investor. At the end of the day, you’re a team trying to make it work together.