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Restaurant show sale could provide model for future deals

CEO Dawn Sweeney, Winsight CEO Mike Wood and Vice Chair Mary Pat Heftman revealed back story on partnership at forum

Heftman and SweeneyHeftman, left, and Sweeney

June 21, 2019
By William Ehart

It was a groundbreaking deal, kept under wraps for 18 months.

The $123 million-revenue National Restaurant Association’s partnership with Winsight—which includes selling the group’s show to the Chicago-based B2B publisher and information services company—was announced in November.

Terms still are confidential. The show is held every year in Chicago.

But principals involved in the deal—including NRA CEO Dawn Sweeney—provided for the first time a look at its unique structure and careful execution on May 29 at the Exhibition and Convention Executives Forum in the JW Marriott hotel in Washington, D.C.

“(This is) one of the most significant things that has occurred in (the trade show) industry, because it sets the stage for what’s going to take place in the future,” said Galen Poss, COO of dmg events and vice chairman of Winsight’s board, who moderated the ECEF panel on the deal.

The panelists were Sweeney, Mary Pat Heftman, vice chair of Winsight Exhibitions, and Mike Wood, CEO of Winsight, which owns a number of food-industry publications and runs conferences. The NRA event is Winsight’s first trade show. Among the key points revealed at the forum:

  • NRA now is a minority owner of Winsight, with NRA COO Terry Erdle a nonvoting board member.
  • The deal was seller-financed—NRA loaned Winsight the money to buy the show, and interest on the loan will bring in more than NRA was netting from the show.
  • NRA agreed to sponsor the show for 45 years.
  • NRA’s entire 25-member show team, led by Mary Pat Heftman, now work for Winsight.
  • All parties involved, including NRA board members, were required to sign nondisclosure agreements before being briefed on the proposed deal. A break of confidentiality could have killed the partnership.
  • Sweeney, Heftman and Erdle worked with a select group of NRA’s 75-member board as the deal was evolving.
  • The partnership won unanimous approval by the NRA board even though the entire board only was made privy to the proposed terms 10 days before the vote.

Sweeney said NRA had been approached many times by would-be buyers—including Winsight—and never had any interest as the show was breaking records annually and was important to the association and the industry.

“(This was an) unusual, somewhat creative deal,” Sweeney said. “It felt to us to be additive to what we could do by ourselves. And we were quite capable of continuing to grow and build this show by ourselves.

“But with the data analytics and the insights, and the content creation capability of Winsight, it was quite a bit different from anybody else that we had talked to over the years. It felt like it was a level up from what we might be able to do,” Sweeney said.

Heftman—who said she sometimes felt like a “traitor” for moving from NRA to Winsight—said one virtue of the partnership is that NRA will stay involved with the show. (Heftman had run the show for NRA since 2001.)

“I’ve seen a number of shows that have sold. And (they) really lost that touch point and the DNA of the association and the real association commitment,” Heftman said.

But she said it was the need for speed in today’s rapidly evolving show environment—in areas such as digital marketing and personalization—that sold her on the partnership.

“NRA had content and great data, we had some digital tools, but we had to evolve pretty dramatically,” Heftman said. “And the ability to do that in terms of the speed which I felt we needed to keep the trajectory going was going to be really difficult over the coming years. I didn’t want to put us behind the eight ball, I wanted to be in front of it.”

The first show under Winsight’s ownership was in May in Chicago, just six months after the partnership was consummated, Heftman noted.

“The exciting part is 2020 and beyond, where we can really start to better integrate all of the different products within Winsight,” she said.

Wood said the partnership allows NRA to benefit from the growth of the show as well as the growth of Winsight.

“We wanted the association to be a true partner,” he said.

“Part two was, how are we going to replace the revenue the show was creating for the association?” Wood said. “There, we came up with a mix of cash and a seller note, or financing vehicle, so the association actually became a lender to us to get the deal done.

“We assigned a value to the note that not only generated a return for them, but added almost twice as much on an annual basis that went back to the association,” he said.

Poss told attendees that he sees the partnership as a model going forward.

“Most of the major independent show organizers have been acquired,” he said. “Sixty-two percent of the shows in our industry still reside in the association community.”

Sam Lippman, president and founder of ECEF organizer Lippman Connects, said low interest rates are making it difficult for associations to monetize their shows.

“The reason more associations have not sold their shows is that they have not figured out, in this low interest-rate environment, how to replace the lost annual revenue,” he said. “But Winsight and NRA have figured out the secret sauce.”