David Moran is not one for making detailed plans but he definitely has an eye for an opportunity. EN caught up with Ocean’s returning chief to ask him what it will take to restore the group to its former glory.
Ocean Media Group’s new owner and chief David Moran is confident he can turn the exhibition and publishing group’s fortunes around after buying the business back from AAC Capital Partners in a private equity deal.
Moran and Ion Equity, the former owners of Ocean, bought the business back in January for an undisclosed sum. The duo originally acquired Trinity Mirror’s exhibition and magazine business in 2006 for £41.5m and rebranded it Ocean Media Group. The pair sold the group to AAC Capital Partners for £104m approximately 18 months later. Shortly afterwards, the economy collapsed and Ocean’s new owners have been fighting to keep ahead of the resulting £60m debt blotting the group’s balance sheet ever since.
This debt eventually led to its banks’ assuming shareholder control last March and a subsequent company restructure, which was followed by a formal sale process last November.
In his first industry interview since returning to the helm, Moran talks to EN about his history, the reasons for buying back Ocean and his aspirations for the future. We also find out why Moran believes opportunity rather than planning will help deliver Ocean’s next phase of growth.
How did you get into the industry?
I used to have a magazine business called Media Ventures, which bought and sold specialist magazines largely from small enthusiast publishers. We would build them up and then sell them to the bigger guys. One of our customers was Trinity Mirror, whom we sold a cycling magazine to and which became the Inside Communications exhibition and magazine division of Trinity Mirror. Phil Graf had tried to sell Inside but failed and subsequently became alarmed by the opinions on the state of the Inside business. In 2001, he asked my business partner Simon Malcolm and I to do a report on the business, then help build it up and sell it on behalf of Trinity Mirror.
Graf then left and the Trinity chief Sylvia Bailey wanted to put the sale on hold for a year to understand what kind of business she was in charge of, so I waited for an opportunity to buy it. This eventually happened in 2006 and we changed the name from Inside to Ocean Media. The reason we chose ‘Ocean’ was because it was the only off-the-shelf company name available from our small brokers in Dublin at 5pm. Thus an empire was born.
You sold Ocean for £104m in 2007, less than 18 months after buying the business for £41.5m. How did that deal come about?
Our plan was to build it up and sell out after a three- to five-year period but after 18 months, AAC Capital Partners came to us with a management buyout team and crossed our palms with silver, so there you have it. We sold at the top of the market, which I wish I could claim I spotted, but it was really by accident. Trevor [Barratt, former Ocean CEO] and Margie [Punyer, former public sector director] were unlucky in that the general economy fell off a cliff in 2008. The business depended on consumers somewhat plus recruitment revenue, and the buyout was unlucky timing for both. As was the case with many businesses then, we were running with a huge amount of debt and that model couldn’t weather the bad times. We were lucky to sell for the price we did and the purchasers were unlucky.
What did you do after selling Ocean?
I formed a partnership for a small charity in Kenya, called Fusion Capital, providing venture capital to start-up businesses. I also took a holiday, rebuilt a house in Manchester – quite boring stuff. I then started Scoop International with Karen Radley, which is a fashion trade show business that held its third edition in February. We sold the majority stake in that business to ITE Group. Over the last 18 months I’ve been stalking Ocean. It took that long because the management team wouldn’t sell it to me, but I could see the potential.
Why did you want to buy Ocean back?
There is an opportunity to grow the company again and make this business bigger. Ocean has had a hard time of it in the last four years as a result of debt, and the cancellation of Boat and Caravan Show was a blow to the business too – there’s no doubt we are a significantly smaller business now. The core business has suffered by being extremely leveraged at a time when the market went away. There was a strategic business plan in place, which Trevor and the team were working towards to grow and expand the exhibition business based on the existing portfolio. But as a highly leveraged business, they never had the money or resource to grow by acquisition or grow in the way it had been planned. They were literally boxed in by debt.
However, Ocean has always been a profitable business and continues to generates a small amount of cash – it has never been a loss leader. Ocean has in fact maintained its position in its core segments and in times of recession, which is an achievement. For example, all of our shows are ahead of last year. If we did nothing at all, this business would grow and be able to make small acquisitions on its own.
What’s on top of your to-do list?
Firstly, it’s about re-acquainting myself with the business and the people again. While some of the personnel has changed, there are enough familiar faces to make me feel comfortable being back. I’ll also be sorting out any operational issues and getting the focus here back on the future. It’s nice to be back – strange, but nice.
One of the biggest tasks is overcoming the uncertainty that resulted from the sales process plus the financial pressures we were under. We were determined to make this business debt-free and it now is, so we have been going to customers ensuring them Ocean doesn’t owe a penny and the future is as certain as it can be. All of our bridal and wedding shows are in a good position, and our Chartered Institute of Housing event is looking fantastic. In addition recruitment money, which we thought had gone away, is also on the up.
I recently acquired a small business called Sustain Magazine, which covers sustainable building and supports our social housing exhibitions and new Homes show. That business went into receivership about eight months ago, but is now on a roll and being folded into Ocean’s portfolio as a complementary media brand.
Ocean MD James Brooks-Ward has now left the group. Can we expect more staffing changes?
In more recent times, James had been working largely on acquisitions and the group’s growth strategy, which is something we won’t be in a position to drive until next year. James is not one to stand around and be idle, so we both agreed on his departure. Also, I’m not keen on the traditional pyramid structure. But there is no big restructure planned. We have some good people who have been in the industry for a long time and run their businesses well. I’ve no intention of interfering with them.
Many exhibition organisers are looking abroad for growth. How important is international expansion for Ocean?
At present, 25 per cent of our profit margin comes from international business, and that’s the only figure I look at. Becoming a debt-free business and injecting working capital will now allow us to significantly expand operations in the UK and abroad. Among the plans are a couple of acquisition targets in complementary market sectors. Ocean’s key exhibition and magazine sectors are social housing, bridal and wedding and fashion, then we have the Event Production Show. Boat and Caravan was disappointing and that is a market we would like to be back in.
I don’t do strategy – plans are things to amuse God. We have always been hugely opportunistic and we know the business has been operating well. We know where we want to expand into, but we’re not going to disclose that yet.
Are you for or against joint ventures?
I don’t tend to like joint ventures and don’t mind buying things. It’s hard to get people who share the same values as your own business.
What’s your view on exhibitions today and into the future?
I don’t see much of a difference between magazines and exhibitions and believe they’re the same animal as both come down to two key things: Content and revenue. You have to have content and a reason to get people to attend an exhibition, and drive revenues through your product offering, much like a magazine.
I also don’t see the exhibition medium changing much in the future. The idea of digital exhibitions is garbage. There’s no doubt print media has been squeezed by the web, but not exhibitions, conferences, seminars and the like. People will always have a hunger to touch and feel, and networking with your peers is incredibly useful. Giving individuals a live forum to chat to their peers and customers is an empowering thing and will continue to be so.
What’s the biggest challenge facing Ocean?
The existing challenge is the conventional one: Managing the business successfully. The challenge for all of us is what happens in the market sectors we operate in and with the economy. In terms of our overseas position, it’s to find enough like-minded people to work with. Ocean staff tend to be individualistic, difficult to manage, but good at taking responsibility for their growth. These people are hard to find and I don’t think there are many left in this industry.
Inevitably, we’ll take a different shape over the next few years, but for now we’re focused on winning back the trust of our customers, continuing to make this business profitable and bank the money to buy new opportunities for expansion next year.
This feature was first published in the March edition of EN.
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