In light of last week's announcement that L.A.-based event rental giant Classic Party Rentals acquired Tucson, Ariz.-based Prime Event Group, it's a good bet that consolidation will continue in the segment, according to mergers and acquisitions experts Fred Hageman and Gary Stansberry, principals with Hageman, Stansberry & Associates, with offices in California and Texas.
The Classic/Prime deal brings companies ranked No. 1 and No. 4 respectively on Special Events' "30 Top Party Rental Companies" list together, creating a company with 16 locations and $170 million in annual revenue, according to company reports.
In an exclusive Q&A with Special Events Magazine two days after the Classic/Prime story broke, Hageman notes that the party rental business "has rebounded significantly from 9/11, and it's definitely grabbed the attention of some of the equity folks in the marketplace."
Several regions in the U.S. are ripe for consolidation, Stansberry notes. "We’re going to see consolidation in the Washington-to-Boston corridor," he says. "I think there is potential anywhere where there are large population centers relatively close together--California, Texas, Florida and the Northeast."
Although the prospect of doing battle with a big competitor may be daunting to operators of single outlets, consolation brings benefits. Looking at the aftermath of consolidation in the equipment rental segment, "Consolidation raised the level of professionalism for the rest of the industry," Stansberry notes. "We saw better paint jobs on trucks, better facilities, newer fleets. It really is a benefit for the entire industry."
Another prediction: Hageman foresees a large party rental company going public within "the next three to five years."
For the full story, see the July issue of Special Events..