Planning Your Exit: Selling an Event Management Business
The event management industry is poised for extreme growth, making the perfect time to sell.
Most of us do not think too far into what goes on behind the scenes at the events we attend, but in reality, there is a trillion dollar industry working overtime to create an unforgettable experience for you. The event management industry is a silent powerhouse, planning and coordinating events varying in size from standard breakfast meetings to the Super bowl. The industry is responsible for over a trillion dollars in revenue and there are currently over 223,000 firms in existence. The U.S. Bureau of Labor Statistics is predicting that the event management sector will expand by 44% before 2020 and that employment will increase by 10% by 2024. Business owners in this field can expect decent profits, varying from the average 6.8% to as high as 9.8%.
Economic conditions are good and M&A activity is expected to remain steady through the year, making it a great time to consider the next step for your business. If you have been thinking about selling your event planning agency, we recommend planning 6-12 months prior so that you are able to secure the highest price possible. The first step to selling your event management business is obtaining a professional valuation. Valuations help business owners plan for the future and give you an idea of how much money you will need to sustain your lifestyle after the sale. To give you an idea of how your business will be valued, we have included a commonly used valuation formula below. Please remember that every business is different and only a professional broker can tell you the true value of your business.
- 3x EBITDA
Now that you know which formulas are used to calculate the worth of an event planning business, you’ll be able to make changes to ensure you get the best price possible for your business. Our experienced intermediaries have sold all types of business and we have compiled these value-boosting tips to help you get the best price possible for yours.
Expand Service Offerings
Most event management firms can be classified into two categories: professional or personal services. Professional firms specialize in trade show or convention planning while personal firms focus on weddings or bar mitzvah type events. Events such as trade shows or weddings are often seasonal and event planners may find themselves stuck with an uneven cash flow during the remainder of the year. Balanced cash flows are critical to buyers looking to invest in a steady, profitable business and if you struggle during the off-season, the solution may be to widen your service offerings. Firms are boosting their revenues and balancing cash flows by offering additional events including scavenger hunts, charity events, roundtables, or parties. These events are year-round and will not only help your cash flow, but they will get in front of potential clients who will remember you for the big events like weddings or conventions.
Technology is finally catching up to this rapidly growing industry. Social media and smartphones are being used to enhance events and create a more interactive experience for the attendees. For firms to remain competitive, a robust social media platform and smartphone capabilities are needed. Guests often enjoy ‘checking in’ to events on Facebook or even using a custom hashtag to share where they are and what they are doing. Event management companies that utilize social media are able to take advantage of free advertising and incredible potential reach by engaging guests. In addition to social media, smartphones are utilized at events for everything from sales to looking up products to managing guests. Having iPads set up for guest registration at a wedding or for purchasing products while at a trade show will help keep you organized and boost your cash flow. Most event management firms are already integrating smart technology into their everyday operations; don’t put yourself at a disadvantage by waiting to get started on this.
Employee retention is critical in the event planning business, especially in the corporate sector. For companies attending annual trade shows or conventions, they are often develop a close relationship with their event planner and if that event planner were to leave your firm, you risk losing that client as well. To alleviate this, we recommend that business owners in this realm implement an employee retention program. Retention programs incentivize employees to stay with your firm and there are a variety of incentives you could use to achieve this goal. A few examples include additional bonuses, trips, employee appreciation events, a percentage of the profits, and so much more. Designing an employee retention plan will not only save you the current headache of potentially losing employees but it will also show buyers you have a safeguard in place for when they take over.
As environmental conservation becomes more engrained in our society, consumers are gravitating towards greener options at every opportunity. By offering greener options within your repertoire, you will appeal to more clients and emerge as an environmentally conscious company. Greener options also allow companies to cut costs, thus increasing your bottom line. Event planners can implement green initiatives by providing ethically sourced foods and materials, limiting printed literature, reusing supplies when possible, and recycling. Your company can also market itself as a ‘green company’ which will appeal to a broader range of consumers and show buyers that you value the environment and saving money.
Diversify Your Clients
Diversifying your clients goes back to maintaining even cash flows. If most of your revenues come from wedding planning, you might find it hard to maintain steady cash flow in the winter. To cope with this, diversify your clients. Bringing on additional clients to balance out the remainder of your year will increase your numbers and put buyers at ease knowing your business is stable. If you work in the personal sector, a few ways you could diversify is through bat/bar mitzvahs, charity events, banquets, or teen parties. For the professional sector, you have the option of adding new clients by offering to organize meetings, team building events, speakers, and corporate entertainment. Main events, such as trade shows and weddings, are often large-ticket items but only take place annually or seasonally. Finding a client whom you are regularly planning events for, such as breakfast meetings, could help you sustain your cash flow during your off season.
The event management industry is poised for a fantastic year; high job growth, increase in demand, and rapidly advancing technology all make for a very bright future. While it may feel counter-intuitive, if you have watched your business grow and your financials trend upwards for the last couple years, the time to think about selling is now. The best time to sell a business is when the economy, industry, and your financials are trending upwards. If you have been thinking about planning for your future and the future of your business, it is never too early to start. The first step in planning your exit is obtaining a no-cost, no-obligation business valuation, which we can provide to you. Nearly 90% of business owners do not have an exit strategy in place but have a well-defined plan can save you and your family a lot of grief if something unforeseeable were to happen. Design your customized exit strategy today and call Viking Mergers to discuss your options and secure your future.