The world has thrown up many challenges in the last few years – none more so than in the festival and live events sector. Let’s rewind to January 2020 when the UK exited the European Union. That withdrawal triggered a multitude of different rules and regulations, saddling the UK sector with a significant amount of red tape, including the international customs document CPD Carnet.
Suddenly, the free flow of music acts between the UK and the EU, as well as further afield from the US – where acts used to fly into the UK as a stop-off on the way to European festivals – was being disrupted, adding both cost and complication to live event schedules.
Then, if the post-Brexit challenge wasn’t enough to make festivals harder to organise and host, along came a global pandemic that would place the UK’s withdrawal from the EU into an entirely new light. Covid-19 had a profound effect on the sector, with national and international regulations putting a firm stop to live events, resulting in cancellations on a scale never witnessed before.
M&A is being seen as a viable way of securing the future of festivals, with collaboration helping to drive growth
Loss of income subsequently caused staff to leave the sector, resulting in shortages of skilled workers, as well as the seasonal shortages hitting the wider hospitality and leisure sectors. While 2021 provided a Covid bounce-back for some, other festivals suffered from the return of overseas travel. Inflation and cost increases have created additional challenges, with headlines about the rising prices of festival tickets.
Set against the backdrop of a cost-of-living squeeze, there are clearly limits to the costs that can be passed on. With the impact of increased red tape, prolonged periods of falling revenue, rising costs of doing business, and low reserves, many in the industry are now looking for ways to ensure future stability for their festivals.
Given the pressures facing the industry since 2020, you might expect many to hunker down and wait for the headwinds to turn in their favour. But the desire for stability has driven consolidation in the sector and created a hotbed of mergers and acquisitions (M&A) activity. Customs clearances, queues, and costs aside, M&A is being seen as a viable way of securing the future of festivals, with collaboration helping to drive growth. This has resulted in a strong appetite across the sector.
Acquisitions are also happening due to the desire to diversify and add additional revenue streams for promoters
Standout deals include the sale of UK promoter and event organiser UK Live to Kilimanjaro Holdings Limited. The UK subsidiary of DEAG – the German live entertainment giant – acquired 90% of shares in UK Live. In 2022, DHP Family, one of the UK’s biggest national independent promoters, bought into alternative independent music festival Bearded Theory’s Spring Gathering.
Interestingly, both deals, which BDO advised on, ensured the founders/creative drivers behind those festivals were kept at the forefront of the festival delivery, demonstrating the importance of festivals finding a home that will value their ethos and spirit and respect their history.
Traditionally, festival groups have acquired other complementary businesses to enable them to access talent and be in a position to offer multiple events/ venues to play at during any given season or year – placing them in a better position to (a) guarantee preferred artists and (b) secure better rates.
Rebuilding, protecting, and growing the sector will be key in 2023
Collaboration within larger groups will of course aim to bring synergies to drive growth and reduce costs, but acquisitions are also happening due to the desire to diversify and add additional revenue streams for promoters – income via tours can be quite cyclical, as opposed to festival income which, although seasonal, happens every year. They also enable music companies or promoters to access new genres or markets. As we near 2023, what does the following year have in store for the sector?
Rebuilding, protecting, and growing the sector will be key in 2023. What’s more, festivals will continue to evolve, with technological advancement at events – from cashless systems, advanced security systems, to VR/augmented reality – together with a strong focus on [environmental, social and governance] at events and festivals, as promoters review their supply chains whilst also continually meeting changing consumer needs.
The good news is there is cautious optimism for the festival scene in 2023, as the threat of recession and softening of consumer spending potentially drives the staycation market, ensuring an active group of festival-goers are more ‘present’ than they were compared to 2022, when there was a post-Covid surge in overseas holidays/travel.
James Fieldhouse is managing director, mergers and acquisitions, at accountancy and business advisory firm, BDO LLP.
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“The desire for stability has created a hotbed of M&As”
James Whitehouse, MD of mergers and acquisitions at accountancy and business advisory firm BDO LLP, explores the industry's need to converge
03 Feb 2023
The world has thrown up many challenges in the last few years – none more so than in the festival and live events sector. Let’s rewind to January 2020 when the UK exited the European Union. That withdrawal triggered a multitude of different rules and regulations, saddling the UK sector with a significant amount of red tape, including the international customs document CPD Carnet.
Suddenly, the free flow of music acts between the UK and the EU, as well as further afield from the US – where acts used to fly into the UK as a stop-off on the way to European festivals – was being disrupted, adding both cost and complication to live event schedules.
Then, if the post-Brexit challenge wasn’t enough to make festivals harder to organise and host, along came a global pandemic that would place the UK’s withdrawal from the EU into an entirely new light. Covid-19 had a profound effect on the sector, with national and international regulations putting a firm stop to live events, resulting in cancellations on a scale never witnessed before.
Loss of income subsequently caused staff to leave the sector, resulting in shortages of skilled workers, as well as the seasonal shortages hitting the wider hospitality and leisure sectors. While 2021 provided a Covid bounce-back for some, other festivals suffered from the return of overseas travel. Inflation and cost increases have created additional challenges, with headlines about the rising prices of festival tickets.
Set against the backdrop of a cost-of-living squeeze, there are clearly limits to the costs that can be passed on. With the impact of increased red tape, prolonged periods of falling revenue, rising costs of doing business, and low reserves, many in the industry are now looking for ways to ensure future stability for their festivals.
Given the pressures facing the industry since 2020, you might expect many to hunker down and wait for the headwinds to turn in their favour. But the desire for stability has driven consolidation in the sector and created a hotbed of mergers and acquisitions (M&A) activity. Customs clearances, queues, and costs aside, M&A is being seen as a viable way of securing the future of festivals, with collaboration helping to drive growth. This has resulted in a strong appetite across the sector.
Standout deals include the sale of UK promoter and event organiser UK Live to Kilimanjaro Holdings Limited. The UK subsidiary of DEAG – the German live entertainment giant – acquired 90% of shares in UK Live. In 2022, DHP Family, one of the UK’s biggest national independent promoters, bought into alternative independent music festival Bearded Theory’s Spring Gathering.
Interestingly, both deals, which BDO advised on, ensured the founders/creative drivers behind those festivals were kept at the forefront of the festival delivery, demonstrating the importance of festivals finding a home that will value their ethos and spirit and respect their history.
Traditionally, festival groups have acquired other complementary businesses to enable them to access talent and be in a position to offer multiple events/ venues to play at during any given season or year – placing them in a better position to (a) guarantee preferred artists and (b) secure better rates.
Collaboration within larger groups will of course aim to bring synergies to drive growth and reduce costs, but acquisitions are also happening due to the desire to diversify and add additional revenue streams for promoters – income via tours can be quite cyclical, as opposed to festival income which, although seasonal, happens every year. They also enable music companies or promoters to access new genres or markets. As we near 2023, what does the following year have in store for the sector?
Rebuilding, protecting, and growing the sector will be key in 2023. What’s more, festivals will continue to evolve, with technological advancement at events – from cashless systems, advanced security systems, to VR/augmented reality – together with a strong focus on [environmental, social and governance] at events and festivals, as promoters review their supply chains whilst also continually meeting changing consumer needs.
The good news is there is cautious optimism for the festival scene in 2023, as the threat of recession and softening of consumer spending potentially drives the staycation market, ensuring an active group of festival-goers are more ‘present’ than they were compared to 2022, when there was a post-Covid surge in overseas holidays/travel.
James Fieldhouse is managing director, mergers and acquisitions, at accountancy and business advisory firm, BDO LLP.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.