Consolidation in Rental and Staging Affect Corporate AV
Feb 8, 2007 1:11 PM,
By John McKeon
Corporate AV clients may soon experience a variety of effects from an ongoing wave of consolidation among providers of event staging and equipment rental services, according to the chair of InfoComm’s Rental & Staging Council.
Tom Stimson of The Stimson Group believes at least some of these effects will be positive, because the current wave of mergers and acquisitions will be much more rational than the last time around. Stimson, who launched his own consulting firm last year, spent many years in the rental and staging business with Alford Media Services.
“One of the challenges of the 1990s acquisition fever was that it destabilized a lot of the companies involved,” Stimson says. “This period of consolidation will be much more controlled, much more mature, and people will be very sensitive to maintaining the customer base, whereas in the nineties it was all about making a buck.”
Stimson says one thing driving the new wave of consolidation is that “there is a lot of private equity money out there, and they traditionally love the AV rental industry because of the idea of making money off a thing over and over again.”
Private equity firms “will generally pick what they consider a market leader and make that firm an anchor,” for a broader acquisition of other firms with the goal of establishing a national or at least regional network of companies. “There are maybe 20 companies that are prime candidates to be acquired by a private equity firm, which then will make them the anchor for a larger rollup,” Stimson says.
“This year, we will start to get an idea of which companies are going to be the leaders,” he adds.
In addition, Stimson anticipates some mergers among companies that are more or less equals. Often, the goal will be to build regional market power. “It wouldn’t be that difficult to bring a really strong group of regional players together and actually get synergy out of it,” he says. Among these advantages are economies of scale, which can be especially valuable when it comes to acquiring and using the most expensive and sophisticated new products coming onto the market.
For the ultimate customer, the corporate AV user, the prospect of further consolidation may seem to threaten only fewer choices and less competition, but Stimson sees a significant upside as well.
“One of the happy byproducts of any period of consolidation is that the disenfranchised go out and start their own companies,” he says. “Over the long term, you end up with about the same number of players. It’s a relationship industry, and the good folks are going to land on their feet.”
At the same time, however, many of the top managers in acquired firms are likely to take the resulting financial windfall and leave their companies. Stimson recalls that in the great merger mania of the 1990s, many of these managers stayed in place to run their firms under the new ownership, deferring their big payoffs in the hope they would grow even further.
Now, it is likely to be different, Stimson says: “There are a lot of folks who aren’t going to miss it this time around.”
