Fall 2014 illustrated that the global competition among large companies providing in-house audio-visual (AV) services is fierce. One after another, AV company acquisitions were announced by GES, Freeman and PRG – in that order.
In September 2014, GES acquired Blitz Communications, a UK-based provider of audio-visual services. By October, Freeman had purchased Tampa-based AVI-SPL as part of its international growth strategy. Also that month, PRG acquired the Dubai-based Gearhouse LLC.
Mergers and acquisitions are nothing new to these three companies, but the fact that these AV company purchases occurred near simultaneously points to a race of who will successfully corner a market first and to the wide appeal of the global AV services business.
So why did these large companies go the mergers and acquisitions route rather than starting up in another country on their own?
Freeman AV President Ken Sanders put it simply – expanding services to another country is easier when buying an existing business.
“If you buy the business, you benefit from their reputation, if you choose selectively. They have a built-in market presence already. They are already doing business with the local government. To start-up in many foreign companies, you’re often required to have a foreign national partner. You wouldn’t be able to go in business without that,” Sanders explained.
Prior to joining Freeman AV, Sanders opened an AV company in South Korea. Although his journey as a business owner in South Korea was not without success, the local regulations and legal hurdles he faced sometimes overshadowed the good.
Sanders added that even after acquiring an established company, there is still much work to be done.
“You have to do groundwork to decide what segment of the business you want to be involved in. Hotel audio visual-services in [another country] may not be as profitable as in the U.S. and Canada. Even though China is building lots of hotels, it’s still not common to have a huge production for 1,000 people. In the U.S., you can have 1,000 people and have a large production,” explained Sanders. “You may find some countries don’t serve the segment you want to work in.”
Paul Wedesky joined GES as senior vice president of audio visual services around the time the company started offering in-house audio-visual services at the end of 2013.
Wedesky indicated that it is easier to start the process for an acquisition when your company is not only well-known but operates globally. He explained that GES has built rapport and developed relationships with other companies during past business dealings.
Developing relationships for an acquisition comes in many forms, and no acquisition happens the exact same way. GES cited its long-term working relationship with Blitz Communications and how the company believed in its core values and complemented its culture.
“Culture is important to us. It has to be a good fit. We take our core values seriously, and we want those who take it seriously too,” commented Wedesky.
Often, there is this false belief that it always the larger corporation approaching the smaller firm for the consolidation. Sanders indicated this is not the usual scenario he encounters. Freeman is approached weekly from AV companies all over the world asking to be purchased.
“It’s overwhelming at times,” stated Sanders.
But what happens when Sanders likes the approaching company?
“We do full-out acquisitions. We don’t do joint ventures. The culture of the company is the most important part. If I can’t demonstrate to Don Freeman or our board of directors that the company shares our values and integrity, then we won’t acquire the company,” he added.
Also contributing to why so many large companies are expanding their services overseas is the growing number of people in the meeting and tradeshow industries finally recognizing the importance of AV.
According to Sanders, AV services had historically been an afterthought. The elements organizers focused their budgets on at first included catering and entertainment. Once those things had taken up the budget, what was left for AV?
“AV has transformed from that mentality. It is now an imperative part of clarifying the message you’re trying to convey — whether it’s in a hotel, sales presentation or board room,” added Sanders. “The customer is becoming more comfortable with technology. Things are easier than it used to be.”
As an in-house AV provider operating globally, offering exclusive services is a strategic differentiator and could also be the reason behind an acquisition.
When PRG purchased Denver-based Davis Audio Visual in February 2010, it cited its main reason for doing so was to access Davis’ proprietary management system for presentations and speakers.
Freeman and GES also offer exclusive systems for presentations and speakers. So in the end, it may come down to which platform show organizers prefer and which company they want to work with.