Apprise's Charlie McCurdy Talks About the Decision to Sell Canon
The Canon Picture
Skodzinski: What was behind the decision to sell Canon? And why now, for a 7.8 transaction multiple—when we are just starting to see signs of economic recovery in some media companies, and a year from now, with recovery kicking in, the multiple would likely increase, in other words generating potentially millions more in profit?
Charlie McCurdy: What we do at Apprise Media is—working with investors—acquire, develop and grow niche media companies. The Canon team did a very good job in expanding the business digitally and globally, and there are many irons in the fire for future expansion.
The strategic fit with UBM is compelling. The price they are paying includes enough of the upside that, from an investment standpoint, it's a good time to sell and move on to the next project. We'll see what that turns out to be over the coming months.
It's anybody's guess where multiples are over the next year or two, and while optimism suggests they may rise, there are plenty of pressures going forward that could keep them quite stable.
Skodzinski: You obtained somewhere around a 35 percent EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin overall, up significantly from when you bought Canon, and a remarkable achievement, especially considering the timing of the economic storm battering the industry. The million-dollar question: How did you do that?
McCurdy: We started with a 28 percent EBITDA margin in 2005 and grew it to 35 percent this year. Note that about half the revenue and more than half the operating profit comes from trade shows, which have a higher profit margin than the publishing division—that helps drive the relatively high margin at Canon.
Still, publishing at Canon is very profitable because of the full suite of offerings across print and digital, and synergies with the trade show group. Our digital business is very profitable because of the value we deliver to marketers.