SMG is trading hands between investment bankers once more, going to a third private equity ownership group in 18 months. Earlier today Toronto-based private equity firm Onex Corporation announced it had agreed to acquire SMG and hire its existing management team including SMG CEO Wes Westley for an undisclosed sum.
Live Nation did not submit a final bid to acquire SMG, Amplify has learned. While the company did submit a non-binding initial offer to examine SMG’s financials and sales material from previous owners Ares Capital, Live Nation officials never submitted a final offer for SMG when closing bids were due late last month. SMG also allegedly blocked Tim Leiweke’s company OVG from purchasing the 40-year-old company, according to a Nov. 6 article by Sports Business Journal’s Don Muret.
“We were told that we couldn’t bid,” Leiweke told SBJ. “I don’t know if it’s because of our purchase of Pinnacle or years of competing with [SMG during Leiweke’s tenure as AEG’s president and CEO]. Who knows? So, we’ve stood down and are focused on growing Pinnacle. We’re proceeding with our own route.”
Since 2007, SMG has been owned by private equity firm American Capital. In 2016, American Capital was purchased by Ares in a $3.2 billion cash and stock deal. SMG holds the management contracts for marquee buildings like U.S. Bank Stadium in Minneapolis, Soldier Field in Chicago and New Orlean’s Mercedes-Benz Superdome with more than 240 sports facilities, concert venues and convention centers under management.
“SMG is the global gold standard in venue management,” said Amir Motamedi, a Managing Director with Onex in a press release this morning. “We’re excited to work with Wes, his management team and the general managers within each of SMG’s venues to continue to provide the same world-class service their clients have come to expect.”
So what is Onex? According to a release, the private equity firm has $30 billion in assets under management and operates its own $6.7 billion fund for private equity and credit securities. It total, Onex businesses have assets of $45 billion and employ approximately 161,000 people globally. Onex shares trade on the Toronto Stock Exchange under the stock symbol ONEX.
By selling to another private equity group, Wesley will have a difficult time convincing employees and potential clients that the company has been for sale for the last decade has a permanent home with Onex and isn’t being shuffled around by investment bankers.
The flipside is that companies like SMG are attractive to private equity because they have a positive cash flow from renewable (and mostly predictable) venue managements contracts without a lot of the costs usually tied to property and development oriented business. What that means for competitor Comcast-Spectacor is unclear. The Comcast-owned venue and entertainment company is reportedly eyeing a sale of some of its venue management assets, following an intercompany transfer of Paciolan early this year to Learfield and the discontinuing of the company’s touring division Spectra Presents. With Live Nation not buying, is there a market for venue management companies beyond banks?
(I don’t know the answer. It’s a rhetorical question).