SMG is wrapping up its 40th year with a new private equity firm as owner. Onex Corporation has agreed to acquire SMG Holdings Inc. in partnership with its existing management team.
It has been a solid path up for the private management and food and beverage firm, which was founded in 1977 by A.N. Pritzger, who formed Hyatt Management Group to manage the Mercedes-Benz Superdome, New Orleans, an account SMG has continued to manage for four decades.
Wes Westley, CEO of SMG, who joined the firm in 1994, was in Europe this week visiting accounts in Germany and England. “I had a series of pre-planned meetings in Europe related to our activities there. This did, however, give me an opportunity to discuss the transaction with our European leadership team,” Westley told Venues Today in an email.
Asked why Onex was the successful bidder, Westley noted Onex was founded more than 30 years ago and is one of North America’s oldest and most successful investment firms having acquired and built market-leading businesses across a range of industries. “Onex is highly supportive of our growth ambitions and we are looking forward to working with them. I want to add that Onex has a true ownership mentality and long-term focus and, as such, values the deep and long-standing relationships that our general managers have cultivated within the municipalities we serve,” Westley wrote.
There will be no change in management’s role going forward, he said, responding to another question thus: “If you are asking whether management will be part owner of the business in the future, the answer is yes.”
Westley would not disclose the other bids received, the length of negotiations or the terms of the deal, but did say “Onex is purely a financial investor. There will be no impact on leadership as a result of this transaction.”
In 2015, American Capital bought SMG for a reported $630 million. Back in 1998, Aramark and the Pritzgers bought out Ed Snider’s one-third interest in SMG for $40 million and a two-year noncompete (after which he founded Global Spectrum.) SMG has also grown by acquisition, buying Leisure Management International and acquiring venue management accounts from Ogden Entertainment in 2000.
Westley said he will “continue to answer to the clients and municipalities to which SMG has answered for four decades.” This sale has no impact on day-to-day business as the executive team, regional leaders and local management will not change and the current organizational structure and offices remain.
“Onex did a lot of due diligence and I think their interest in SMG is a testament to the quality and depth of our organization, and the possibilities for growth that they see in our business,” Westley concluded, saying no units of SMG will be spun off, “absolutely not.”
SMG manages nearly 240 convention centers, stadiums, arenas, theatres, performing arts centers and other venues globally. In 2017, SMG added the Shenzhen World Exhibition and Convention Center in China and the Aberdeen (Scotland) Convention Center to its portfolio.
This transaction is expected to close in early 2018 subject to customary conditions and regulatory approvals. The terms of the transaction were not disclosed.
SMG is headquartered in Conshohocken, a suburb of Philadelphia. Besides all aspects of venue management, it includes a food and beverage division, combining Savor and Premier.
Onex has offices in Toronto, New York, New Jersey and London. This investment will be made by Onex Partners IV, Onex’ $5.7 billion fund. Northlane Capital Partners (NCP), which was spun off from American Capital, which was acquired by Ares Capital, was the owner of SMG that sold to Onex.
NCP is owned by the four partners who have managed ACE III since its closing in September 2014: Justin DuFour, Sean Eagle, Eugene Krichevsky, and David Steinglass. They will continue to be supported by the same six-person investment team and be based in Bethesda, Md. NCP invests in control buyouts in middle market companies based in North America, focusing on healthcare, outsourced business services, and industrial technology.
Through its Onex Partners and ONCAP private equity funds, Onex acquires and builds high-quality businesses in partnership with talented management teams. At Onex Credit, Onex manages and invests in leveraged loans, collateralized loan obligations and other credit securities. Onex has more than $30 billion of assets under management, including $6.7 billion of Onex proprietary capital, in private equity and credit securities.
Onex’ businesses have assets of $45 billion, generate annual revenues of $30 billion and employ approximately 161,000 people worldwide, according to a posting on BusinessWire. Onex shares trade on the Toronto Stock Exchange under the stock symbol ONEX.