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WHAT’S DRIVING THE GROWTH IN LIVE EVENTS?

Jan 22, 2019

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The experience economy is one of the key drivers of the global events industry. People want new and exciting experiences rather than things. The market for events – whether it’s music, sports, theatre, festivals or cultural – has grown as we all seek to experience more. 

The growth in this sector has also been enhanced by sensory advances. This includes sound, lighting, visual, interactive and immersive technology. As consumers, we’re all seeking to indulge our senses and gain the utmost from our experiences. 

What’s the market worth? 

MBD Mintel estimate the market to have been worth £43 billion in the UK during 2017. This is up from £38.3 billion in 2013. It includes the various elements of the market pictured in the chart below: 

According to Mintel, this market is set to grow at a compound annual growth rate (CAGR) of around 2% per annum. But within the overall market, some segments are expected to perform better than others. 

Conferencing, exhibitions and trade fairs 

The conferencing part of the market has seen declines over the last few years despite significant investment into conferencing facilities. Yet, exhibitions and trade fairs have seen sustained growth for some time. This is shown by the success of LDC’s investment into the NEC – a sale to Blackstone that happened last year. 

Subject to any impact from Brexit, the exhibitions and trade fairs segment should continue to grow. In 2017, we sold Hawthorn, a business which provides equipment and services to various events venues, to US giant, PSAV. The UK is still accessible to most of the world with excellent communications links and a great destination for delegates from around the world. 

Sports, music and cultural events 

Sports, music, festivals and cultural events all benefited from double digit growth in recent years. Sports growth can often be based on major international events like the Cricket World Cup in 2019 and the Commonwealth Games in Birmingham in 2022. But many events businesses also provide multiple services including upgrading audio-visual equipment to improve the experience of consumers. 

Music events growth is driven by other factors. With the rise of music streaming, like Spotify, payments to artists for each download has almost halved in the past three years. Artists are therefore having to supplement their income through touring and performing live. The music events market grew some 12% (source: IBIS World) between July 2016 and 2017. 

At Cooper Parry Corporate Finance, we also advised the UK’s leading provider of audio equipment to the live events market, SSE Audio Group, to Solotech Inc of Canada in November 2018. Solotech, which supports acts like Cirque du Soleil, Celine Dion and Michael Bublé, saw the opportunity to form a European group and help develop a 360o (or end to end) service provider.  

Incentive travel and performance improvement 

Another growth segment within live events is incentive travel and performance improvement, which, according to Mintel, has grown some 33% over the past five years. In 2017, we advised the management of Virgin Experiences as they gained investment from Inflexion to grow the business.

What are the opportunities for investors?  

We’ve seen a large number of deals in the sector and expect this to continue. As well as deals advised by us in the hire and equipment space like SSE and Hawthorn, we’ve seen private equity investment by Blackstone in the NEC and PSAV, The Jordan Company in VER and PRG’s merger; NVM’s investment in Presteigne; Westbridge’s investment in DB Pixelhouse and many more deals. We expect transactions like this to continue. 

What are the challenges for investors? 

A major challenge in the live events market is the amount of capital expenditure (CAPEX) needed to be invested to grow the business. That might be for new conferencing facilities, the latest technological equipment or hiring stock to support events. This usually determines the value that buyers will pay for the business. It’ll be estimated how much maintenance CAPEX is needed each year to sustain the current level of profitability. 

Across the sector, companies and investors are seeking to address this challenge. Some are extending the life of hi-tech equipment by the clever use of software that produces excellent results without having to invest in equipment. Others have developed a systematic approach to selling off equipment (frequently out of the country), using this as a way to make profit in its own right. 

Still, others are minimising their own CAPEX by hiring in as much equipment as possible. However, I remain to be convinced that the economics of this strategy work in the medium to long term. 

The investment we expect 

We’ve seen investment into leading edge products (like LDC’s investment into Martin Audio) and software and content creation (like Livingbridge’s investment in Disguise). 

The market for live events is varied and fragmented and we anticipate the level of investment to be maintained over the coming years. This is because the demand of the public for experiences continues to grow. 

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