Providence buys into music retailer Sweetwater
Providence Equity Partners, the private-equity owner of live entertainment firms including Superstruct Entertainment, Ambassador Theatre Group and Tait (Towers), has bought into Sweetwater, the leading US retailer of musical instruments and audio equipment.
Terms of the transaction, which sees funds advised by Provide make a “strategic investment” in Sweetwater, were not disclosed.
Founded in 1979 by Chuck Surack, Sweetwater now turns over more than US$1 billion annually and has served over 1.5 million unique customers. “I am incredibly proud of the growth our company achieved over the last year, which would not have been possible without the dedication of our employees and world-class team of music gear experts,” comments Surack (pictured). “I am confident this growth equity investment will allow us to reach new heights and further our mission of enabling customers to make music and pursue their dreams.”
Other music-industry investments by Providence include software firm Impact, the UK’s Brilliant Stages (via Tait) and, formerly, Greencopper parent company Patron Technology, which it sold last year. Its festival division, Superstruct, recently acquired Dutch event Zwarte Cross, in its first acquisition since before the pandemic.
“We believe the company is well-positioned for sustainable growth as live events return”
“Providence is a great partner to continue our momentum and take Sweetwater to the next level,” says John Hopkins, Sweetwater’s COO. “As the world emerges from the pandemic, we believe the firm’s strong track record of helping music-related businesses accelerate their growth will be invaluable.
“The Providence team appreciates what makes Sweetwater different and we are aligned on how we can further leverage our unique culture to capitalise on new opportunities that create even better customer experiences.”
Scott Marimow, managing director of Providence, comments: “Sweetwater’s status as an online industry leader is a direct result of its unique culture and dedication to customer service. We believe the company is well-positioned for sustainable growth as live events return and artists and entertainment companies look to provide the memorable experiences that have been absent over the past year and a half.
“We are excited to partner with such a culture-driven company and look forward to working with Chuck and team to grow the business together.”
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TEG invests in Ambassador Theatre Group
Sydney-based live entertainment group TEG has acquired a minority stake in West End theatre operator Ambassador Theatre Group (ATG).
ATG, which is majority owned by Providence Equity Partners (Superstruct Entertainment, Tait), owns or manages around 50 venues globally, including many of London’s best-known theatres. Its portfolio includes the Savoy and Lyceum theatres in London, the Lyric and Hudson in New York, and a growing stable of UK music venues, including the upcoming Stockton Globe and Swansea Arena.
In conjunction with Providence, which paid £350 million for ATG in 2013, TEG – itself owned by a private-equity firm, Silver Lake – will reportedly inject £160m in new equity into ATG as UK theatres tentatively reopen.
It is the first acquisition for TEG – a ticketing, touring and venues company with offices across the Asia-Pacific region – in the UK since its buy-out of the former MJR Group last year. The company hired a new director of M&A in May.
In addition to its venue portfolio, ATG operates the UK’s most visited theatre website, ATGtickets.com, selling around 11 million tickets a year pre-coronavirus. The London-based company, which employs around 4,000 people, laid off 1,200 casual staff earlier this month.
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Patron Technology sold to PE firm Vector Capital
San Francisco-based private-equity firm Vector Capital has acquired Patron Technology, the company behind Greencopper, Marcato and several other familiar event technology products.
Vector, which specialises in investing in established technology businesses, says all Patron staff remain in place and will continue to operate the company on a day-to-day basis. Terms of the deal were not disclosed, but Vector manages nearly US$4 billion worth of investments.
“With Patron Technology, we saw an opportunity to back the leading platform and a seasoned management team as they successfully navigate unprecedented, Covid-induced market disruption in the live events industry,” comments Rob Amen, managing director of Vector Capital.
“Vector excels at investing during volatile times, and our thesis is that only the best products and most talented executives will survive this dislocation and emerge as market leaders. We are confident that our growth investment will enable Patron Technology to not only outlast this global pandemic but become stronger on the other side of it.”
Patron Technology, formerly known as PatronManager, has spent the past few years buying up various event technology companies, including app developers, ticket sellers and event management platforms. Its portfolio includes festival app company Greencopper, event management software developer Marcato, RFID provider Token and ticketing software firms ShowClix, Ticketleap, Ticketbooth and GrowTix.
“Vector excels at investing during volatile times”
Marc Jenkins, CEO of Patron Technology, says: “This is an exciting and important day in our company’s history. It kicks off a fresh, new partnership alongside the thoughtful investment team at Vector. We are eager to work with them to propel the business through the age of social distancing and beyond.
“I’m extremely proud to be part of such an amazing team, past and present, that works tirelessly to serve our world-class clients.”
“With a great set of products, a strong balance sheet and an unparallelled management team, Patron Technology is well positioned to grow over the coming years,” adds Vector Capital vice-president Tom Smith.
“We look forward to partnering with Marc and his team as they continue to grow from this new position of strength and renewed investment.”
Buying and selling for beginners: Mayland CEO talks industry M&A
Investments and takeovers are the core business of Matthias Just, CEO of Mayland AG. Before becoming a lawyer Just completed an apprenticeship as a banker, and his CV includes positions in the UK and US at companies including Deloitte and Touche Corporate Finance.
Since the end of 2005, he has been a member of the board of Mayland AG, a Dusseldorf-based company specialising in mergers and acquisitions – including the likes of the takeover of Parookaville by Superstruct, whose portfolio also includes Flow Festival, Sonar, Sziget and Wacken Open Air, and is backed by Providence Equity Partners, which manages more than $45 billion worth of investments.
IQ spoke to Just (pictured) about why the live music industry is increasingly attractive to institutional investors – as well as how external investment companies can offer a compelling alternative to the major multinational concert businesses…
IQ: What is the external perception of the live music industry in the financial sector?
Matthias Just: The live music industry is growing and a stabilisation of turnover and profitability figures can be seen across most companies. Besides this, there are always new festivals that draw attention to themselves through innovative concepts and designs and are able to assert themselves in the market. In general, demand is still very high, despite increasingly high ticket prices.
In recent years, we have noticed that consumers in the leisure and entertainment sector have seldom been price-sensitive and are prepared to pay higher ticket prices in order to spend a weekend at their favourite festival. This willingness to pay is what distinguishes this industry and makes it interesting for strategic investors, as well as financial investors and corporate holdings.
On the other hand, what is the current situation of the financial market in terms of potential investors and investments?
It was inevitable that Brexit, the [US-China] trade dispute and the signs of an imminent recession would not leave investors unscathed. Therefore, we can perceive a slight increase in uncertainty across the market as a whole, which will – should the signs of an economic downturn become clearer in the coming months – lead to a reallocation of investors’ investment focus.
In this sense, this means that companies in a sector that is independent of economic cycles – such as the events market – will be given preference over cyclical investments, which generally tend to be negatively affected in times of recession.
“This willingness to pay is what distinguishes this industry and makes it interesting for strategic investors”
What role does Mayland play in the M&A process?
We see ourselves both as consultants and coordinators. Within an M&A transaction, on which we act both on the buyer and seller side, we coordinate all necessary services in order to achieve a successful conclusion of the transaction. In addition to classic sell- or buy-side M&A advice, our range of services also include succession planning, financial advice, company valuation and strategic business development.
There are many in the concert industry who worry about the involvement of external investment companies. Are they right to be concerned?
These reservations about external investment stem from the public debates about the financial sector due to the financial crisis in 2008. Also, various companies have been forced to cut jobs after an investment company had joined them – and even today, some entrepreneurs still face a loss of control when taking an investment on – but this process is anything but inevitable.
While anyone who sells shares in a company loses some control, the manner in which this transfer of control takes place is an important factor that a seller can influence significantly before the transaction is completed – a crucial point at which we come into game and, together with the current owner and management of a company, determine how this transfer should be structured from the seller’s point of view.
There are many understandable motives for dealing with the topic of participation [from the investment sector] from the entrepreneur’s point of view. However, those who are not familiar with participation systems and legal framework conditions should take on professional support, even in the case of a first initial meeting with a potential buyer.
“Companies in a sector that is independent of economic cycles – such as the events market – will be given preference over cyclical investments”
In one sense, AEG, CTS Eventim and Live Nation are investors, too. Aren’t these companies the better investors than those who have little or no industry knowledge?
In terms of strategic fit, these players in the industry are certainly good candidates – concert companies or festivals can benefit from the networks of these companies and partially improve their operative business. On the other hand, these investors usually require a majority stake (usually more than 50% – ie a qualified majority with which they can enforce all strategic decisions), which means that the seller can lose control of his or her festival, at least in the legal sense.
For smaller companies that are looking for a strategic partner, but do not want to give up control over their business, other strategic investors or financial investors may be the better alternative.
Providence Equity, as a financier of Superstruct, is a prominent player in concert takeovers. Do you expect other big players from the private-equity sector to increasingly be interested in the live music industry in the future?
That’s quite possible. However, Providence Equity’s Superstruct vehicle and its managers [including CEO James Barton, ex-Creamfields/Live Nation] are industry experts who know the festival business very well and usually have experience as festival organisers themselves.
This expertise is particularly important in an industry such as live entertainment, because the structures are special and personal aspects play a meaningful role.
However, in addition to Providence, there are many other investment companies with a strong interest in the festival industry.
ATG expands into UK arenas with new Swansea venue
The construction of a new 3,500-capacity arena in Swansea, Wales, began today (Wednesday 27 November) as part of a £1 billion regeneration of the city centre.
Swansea Arena, opening in 2021, is the latest live music venue in the Ambassador Theatre Group (ATG) portfolio, in addition to the Stockton Globe, which is reopening next year.
With almost 50 entertainment venues, Providence Equity-backed ATG hosts acts including Pet Shop Boys, Snow Patrol and Emeli Sandé in the UK, Lionel Richie, Al Green, Lauryn Hill and Lenny Kravitz in the US and Bonnie Tyler, FKA Twigs and Sinead O’Connor in Germany.
ATG also operates the UK’s most visited theatre website ATGtickets.com and overall sells around 11 million tickets a year.
“ATG has nearly 30 years’ experience of managing venues but this is an exciting moment that sees us expanding our portfolio to UK arenas”
“We have been working with Swansea Council for a period of time now to make the Arena a world class venue for music, comedy, conferencing and events in South Wales,” comments Mark Cornell, CEO of ATG.
“ATG has nearly 30 years’ experience of working with councils and managing venues but this is an exciting moment that sees us expanding our portfolio to UK arenas following our success across the UK, US and Germany.”
“Swansea Arena is an incredibly exciting addition to ATG,” adds Katy Arnander (pictured), ATG content development director. “The new arena will be at the forefront of our music, comedy, events and exhibitions strategy as well as presenting new content like gaming and esports which is a perfect fit for such a technologically advanced arena.”
The arena is funded by Swansea Council and part-funded by the £1.3bn Swansea Bay City Deal.
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Superstruct buys into Wacken promoter ICS
Superstruct Entertainment has invested in Germany’s International Concert Service (ICS), adding leading metal event Wacken Open Air (W:O:A) to its stable of European festivals.
The Superstruct-ICS deal, which is subject to regulatory approvals, is structured as an “investment and partnership agreement”, in which each company invests in the other, according to Superstruct. The company has similar arrangements with Norway’s Øya Festival, acquired last August, and, more recently, Next Events, the company behind German hip-hop festival Parookaville.
In addition to W:O:A, its flagship festival, ICS produces and promotes ancillary events including Hamburg Metal Dayz, Wacken Winter Nights and motorsports and music festival Werner Race.
ICS founders Holger Hübner and Thomas Jensen, and the current leadership team, will remain in place after the transaction (the terms of which were not disclosed) closes.
In a joint statement, the pair say: “Joining the Superstruct network is terrific news for our team and our fans. We will continue providing world-class experiences through our portfolio of live events, and now we are able to additionally benefit from a partner with a global network and experience. This will help us grow further and make what we do even better.
“We are very excited to join forces with ICS, the global leaders in metal”
“We very much look forward to working with the Superstruct team to continue pushing the envelope. Our goal is always to inspire and enthuse heavy metal fans around the world and to make people happy with our live activities.”
All 75,000 tickets for Wacken Open Air 2020 sold out in just 21 hours, following a successful 30th-anniversary event with Slayer, Sabaton and Prophets of Rage this summer.
James Barton, CEO of Superstruct, says: “We are very excited to join forces with ICS, the global leaders in metal. Led by Holger and Thomas, and supported by an experienced team overseeing a portfolio of quality events, we are confident that together we can continue to expand ICS and take the company and its events to the next level.”
Superstruct Entertainment, backed by private-equity firm Providence Equity Partners, additionally owns and operates Sziget (Hungary), Flow Festival (Finland), Sónar (Spain) and Spanish party promoter Elrow. In addition to next events, its most recent acquisitions are Down the Drain (Northside, Tinderbox) in Denmark and several UK events formerly owned by Global.
Patron Technology acquires Australia’s Ticketbooth
Patron Technology has added Australian DIY ticketing platform Ticketbooth to its burgeoning event tech portfolio.
Ticketbooth, along with sister companies Token Systems (RFID/cashless payments) and Audiencetools (social marketing), is Pennsylvania-based Patron’s first acquisition outside North America. The company also owns ticketing services ShowClix and Ticketleap, festival app developer Greencopper and event management platform Marcato, which it acquired last October.
“Over the past few years, Patron Technology has grown into a global presence in the event industry, offering event organisers a better, more flexible way to manage their events and deepen their relationship with attendees and sponsors,” says Marc Jenkins, Patron Technology’s CEO. “Our top priority, always, is providing our partners with the tools they need to take their event to the next level.
“With this latest acquisition of Ticketbooth, we will be able to do even more to give attendees an amazing event experience.”
“With this latest acquisition of Ticketbooth, we will be able to do even more to give attendees an amazing event experience”
Simon Guerrero, CEO of Ticketbooth, adds: “We already work well with ShowClix and align with the mission of Patron Technology to supply organisers with the tools they need to create awesome experiences every step of the way, so I am pleased to be integrating with the Patron Technology team fully.
“Both Token and Audiencetools are positioned to help with strong cashless and social marketing platform offerings for the US.”
According to the International Ticketing Yearbook 2018, Ticketbooth is one of “scores of small-scale and DIY outfits competing for a slice of Australia’s billion dollar-plus live entertainment space”, in a market dominated by TEG’s Ticketek and Live Nation’s Ticketmaster.
Patron is majority owned by Providence Strategic Growth, a unit of Providence Equity Partners, the private-equity firm behind fast-growing European festival promoter Superstruct Entertainment.
Providence’s Sónar allies with Paraíso
Advanced Music SL, the promoter of Barcelona’s Sónar festival, has acquired a stake in Paraíso Sonoro SL, the company behind fledgling Madrid electronic music event Paraíso.
According to Spanish promoters’ association APM, Sónar and Paraíso have “joined forces to develop content and create joint strategies”, though each company retains its independence and existing staff and management teams.
Paraíso will mark its second edition in Madrid on 14 and 15 June, with music courtesy of Chvrches, Charlotte Gainsbourg and Laurent Garnier and non-musical content that incorporates art, videogaming and gastronomy.
The 26th edition of Sónar Barcelona, meanwhile, runs from 17 to 20 July. Artists performing include Vince Staples, Underworld, Asap Rocky, Four Tet, Andy C and Disclosure (DJ set).
“This strategic alliance will be very positive for the development of Paraíso and its positioning”
In a joint statement, Paraíso organisers Jose Morán, Ana Sanabia and Nacho Santos say: “This strategic alliance will be very positive for the development of Paraíso and its positioning in the national and international market. We share something essential: the love of music and the way in which we understand this industry.”
“We are particularly pleased to work hand in hand with José Morán and his team, who we have known for 25 years,” add Advanced Music’s Enric Palau, Sergio Caballero, Ventura Barba and Ricard Robles. “Separately, we have created festivals that have become reference models. Now, together, we share a new and stimulating creative challenge.”
Since June 2018, Sónar has been majority owned by Providence Equity Partners, the parent company of Superstruct Entertainment, whose portfolio also includes Sziget, Øya Festival, Flow Festival, Elrow and, most recently, Down the Drain (Northside, Tinderbox) in Denmark and several UK events formerly owned by Global.
Superstruct partners with Down the Drain
Providence Equity-backed Superstruct Entertainment has invested in Down the Drain Group, forming a partnership with the largest independent concert and festival promoter in Denmark.
Down the Drain Group is behind a number of Danish festivals including North Side and Tinderbox, and is the parent company of concert organiser Down the Drain Concerts, formerly Beatbox Entertainment.
The news marks a busy few weeks for James Barton’s Superstruct. The company took control of Global’s festival arm at the end of April, acquiring festivals including South West Four, Truck, Tramlines and Boardmasters.
Superstruct split the festival portfolio with former Global partner Broadwick Live.
“Our ambition is to be part of the world elite when it comes to music experiences, and with Superstruct as part of the team, we can match the global competition for the greatest artists,” says Brian Nielsen, Down the Drain Group chief executive.
“Our ambition is to be part of the world elite when it comes to music experiences, and with Superstruct as part of the team, we can match the global competition for the greatest artists”
“Superstruct represents the strengths and values that we value as a company, and what we create our festivals from. We can, in other words, not imagine a better match, ” adds Nielsen, who will continue to run the daily management of Down the Drain along with Flemming Myllerup and Mads Sørensen.
“The Down the Drain team has built an impressive platform and series of events over the past nine years, and we look forward to combining our expertise with the strong brands and take the company to an even higher level,” says Superstruct chief executive and Creamfields founder Barton.
Drumsheds, Exhibition London for hire with Venue Lab
Broadwick Venues, the venue arm of festival promoter Broadwick Live, has appointed Venue Lab to manage all venue hire for new event spaces the Drumsheds and Exhibition London.
The venue operator has announced the partnership on the back of a successful collaboration with Venue Lab at popular London venue Printworks. The company will manage corporate, brand and filming bookings and will be solely responsible for all venue hire management for the new event spaces.
Venue Lab is a Vibration Group company and the creator of event spaces including Printworks London (6,000-cap.), Landing Forty Two and The Pumping House, Dock X London, Thirty Eight Grosvenor Square and the recently launched Magazine London (3,000-cap.).
“Following our very successful partnership at Printworks London, Venue Lab is the natural choice to help us develop the Drumsheds and Exhibition London as new cultural spaces for the city,” comments Broadwick Venues managing director Bradley Thompson.
Announced earlier this month, the Drumsheds is a ten-acre outdoor events space with four giant interlinking warehouses, offering a total indoor capacity of 10,000. The venue hosts its inaugural event on 7 June, with the first of Broadwick Live’s weekend-long Field Day festival.
“Venue Lab is the natural choice to help us develop the Drumsheds and Exhibition London as new cultural spaces for the city”
Field Day is one of several festivals suspected to remain under Broadwick Live’s control, following the takeover of the festival arm of its former owner, Global, by Providence-Equity backed Superstruct Entertainment. Broadwick is believed to be undertaking a management buyback of its shares from Global.
Scheduled to open at the end of 2019, Exhibition London will transform a Victorian Grade II Dimco East building in Shepherd’s Bush – originally used as an electricity generating station for the London Underground – into a multi-purpose music and events venues with a standing capacity of 1,400.
Spanning two floors, the 34,000sqft venue is currently taking bookings for events taking place from January 2020.
“We are very excited to be partnering with Broadwick Venues and further expanding our portfolio,” says Venue Lab’s director of venues, Claire Pastore.
“Venue Lab has a proven track record of finding, activating and delivering thought-provoking spaces both commercially and to create destinations,” adds Pastore.