Survival of the Fittest

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As an event planner and owner of Atlanta-based Out of the Ordinary Events, Leisle Moody is accustomed to adapting to changes both on the job and in her personal life. After being laid off from a pharmaceutical company, she decided to pursue her passion as a full-time event planner. With over 20 years of experience, she has accumulated plenty of expertise working with small and large firms, the entertainment industry and nonprofit organizations. However, lately, she’s had to acclimate to changes in the industry she loves.

“I’ve noticed that one day a company is around and the next day they’ve been bought out by a larger company. Because I’m still small enough and boutique enough to remain autonomous, they have not affected me,” she says. “But, I have noticed.”

A Growing Trend

Moody’s observation of mergers and acquisitions (M&A) in the event rental and manufacturing industry — both on the national and regional level — is indeed a noticeable one.

In fact, it’s part of a recent trend in which national companies are merging with reputable local companies or acquiring them.

In the past year to date, Classic Party Rentals, a leading event rental company, has acquired Prime Event Group, Carolina Party Plus, Atlanta Party Plus, Parties A La Carte and most recently, Panache… An Event Rental Company and La Bella Party Rental Company, in addition to three other acquisitions in late 2005. In January, Stamford Tent & Party Rental of Connecticut merged with Party Rental Ltd. of New Jersey. At the end of last year, event equipment rental company Signature Special Event Services LLC was acquired by TVI Corp.; in March, Celebration Events had acquired Festive Occasions of Woburn, Mass. — and these are just a few of the transitions that have taken place in recent years.

Investors Validate Industry

With these merger announcements springing up so frequently, you may wonder what’s behind this constant M&A activity and how it’s affecting the industry.

For John Ciniglio, president of Meyco Products Inc., a manufacturer of custom pool covers, the motivation behind his company’s recent acquisition of TopTec Products, was about spreading out its business risks.

“We were looking for an opportunity to diversify,” he says. “Being in the pool covering business, we are very seasonal and were looking for an ideal situation that had a similar technology in terms of manufacturing and something we could possibly have under a different season. Ultimately, TopTec came across as a very good fit operationally for Meyco Products.”

According to Gary Stansberry, a partner at Hageman, Stansberry & Associates, an M&A firm specializing in the rental industry, the recent spate of activity has everything to do with the strategic and financial prospects of the businesses.

“The investment community is taking a look at the rental industry and said it has some sound economic underpinning … and it has validated the industry as being a legitimate business segment,” he says. Investors see the event rental industry as one that could potentially offer a decent return on their investment, he adds.

According to the American Rental Association, the total size of the U.S. rental market was 32.8 billion in 2006. Even more, from 1998 to 2006, party and event rental revenue increased 10 percent.

These mergers and acquisitions should not upset the smaller or local companies, Stansberry notes, but should motivate them.

“A [rising] tide tends to raise the level of all boats,” he explains. “Certain operations that were mom and pop in the past really need to take a look and make sure they’re on the cutting edge of what they can offer their customers in terms of service and make sure they can present the proper image to the customer.”

Stansberry’s partner, Fred Hageman, agrees that the trend bodes well for the industry.

“There’s a lot money and capital on the sidelines, but it also raises the bar — it raises the level of professionalism, the level of offerings and the level of services,” he says. “Overall, we think it’s a positive trend, both historically and going into the future.”

David vs. Goliath

For some companies, the decision to merge or acquire a company requires expanding products or upgrading facilities, computer systems and websites, which could mean higher prices for event planners. But, Hageman adds, the increase in prices is justified.
“We’ve seen in the past year or two that it’s tending to raise prices, but there’s also broader offerings — more specialty linen, more specialty china, higher technology regarding tenting,” he explains. Investors are “looking for a return. They’re raising the bar and with that bar being raised, there are pricing parameters that go along with it.”

While a large corporation may have the financial backing, Moody notes that smaller companies can still have important qualities a national one may not.

“Sometimes people are just turned off by the big monolith company and they want the smaller, more intimate, 100-percent-accessible company and person,” she points out. “We may not be as inundated with clients — which means we have more time to spend with you. My cell phone is never off. I’m the first one at the event and the last one to leave and if anyone has a problem, they know they can come to me and I will get it taken care of.”

And Moody believes there’s room for both the local and national businesses.

“I think the industry can withstand it as long as the purchasing company does not affect the quality of service that they render. Because if the quality of service is reflected in a negative fashion, then it’s going to hurt the industry and it’s going to make it harder for event planners,” she says. “But I think there’s going to be a balance.”

Survival Tips

Overall, what’s the best business advice for the local company striving for success? According to Hageman, a company’s image is an important factor. “Make sure your logo looks good and is up to date. Make sure your website is user-friendly and your trucks are clean and present a good appearance. Make sure that your employees present a good appearance and image,” he advises.

Concentrating on a specialty may also be crucial to survival according to Stansberry. “You can’t be all things to all people. There’s a way for the smaller companies to prosper, but they’re going to have to find a niche and keep their inventories fresh and relationships they have intact,” he says.

Moody, for her part, believes a little patience is the key to a long and prosperous existence as a small business.

“It is hard to survive because sometimes you’re caught in a Catch 22: You can do the work, but you may not have the client roster that the larger companies have, so new clients may not put their faith in you, so it takes a longer time for you to convince larger corporate clients to work with you,” she says. “But, once you do and once you show them that you can do the job just as well as anybody else, then it gets better.”