History is Being Witnessed in the Event & Party Rental Landscape and What Signals it is Producing

On March 19th, 2024 the nation’s largest Event & Party Rental company, Bright Event Rentals (backed by Trivest Partners), announced its acquisition of the largest East Coast Event & Party Rental company, Peak Event Services.

This marks the first time in the United States we are seeing a truly national scale player in the industry. Prior to this landmark acquisition, the E&PR space was characterized by a trend toward regionalization of tent and event rental brands. Every section of the country seemed to have its 800 lb gorilla. Despite the challenges in the market such as seasonality and labor shortages, there is a renewed healthy optimism in the tent and event world which is attracting more private equity to the space.

US Market Sizing: Event & Party Rental Industry

The overall industry barometers point to healthy trends as the industry has grown from $5.9 billion in 2022 to $7.9 billion in 2023, growing above its pre-COVID position.

Source: IBISWorld

Private Equity Narratives Entering E&PR Industry

PE groups entering the space isn’t without reason. Most entrenched incumbent market share players have long-tenured repeat relationships with exceptionally high-caliber and price-inelastic customers such as Universities and for the most part, large corporations.

Think about it. The largest university event, graduation, happens annually across the country at every university and university administrators do not have the experiential resources to install, manage, and logistically plan all facets of an event – especially in the northeast quadrant where space is a scarce commodity and graduation events are commonly held outdoors in many of the largest universities in the country.

These are very lucrative relationships that often do not change hands and are yours to lose once you’ve proven your ability and know-how to manage and logistically perform year-in and year-out.

Most incumbent operators with larger market share positioning in their footprint have been operating for 20 to 40+ years and it’s not unheard of to see 2nd and 3rd generation, family-owned E&PR businesses with 75 or 100 year tenures.

Why the long durations? Who do you know that has a 120 ft x100 ft tent and 10,000 chairs of the same color and brand in storage? Lowes nor Home Depot, nor any store in town you know has that in stock. And it would be an incredible waste as a purchasing manager if you were to go out and purchase 10,000 chairs at full price and use it once a year then leave it unutilized 364 days of the year – hence the attractiveness and allure of an operator who rents out equipment at large premiums to be utilized by those who have exceedingly high needs for those special moments in life. 

Bright and Classic Party Rentals History in the Making  

Bright has an interesting history that stems all the way back to E&PR behemoth, Classic Party Rentals. Classic, like Peak, was backed by Private Equity firm, Dubin Clark, when they purchased it in 2003. Dubin purchased Classic when it was producing annual revenues of $45 million at about 6 locations and grew it to $185 million in revenue and 18 locations when they sold it in 2007 to another Private Equity firm, Quad-C. It was the nation’s largest full-service event rental company.

Unfortunately, Quad-C bought Classic just prior to the Great Financial Crisis and never really recovered. Burdened by a financial liability overhang and the operational challenges eventually led Classic to file Chapter 11 Bankruptcy in February 2014. Despite the troubles, Classic maintained exceptional repeat relationships and Apollo Global Management saw the light at the end of the tunnel, who took control in 2014. Apollo steered the ship for 3 years when they sold it in 2017 to former Classic Party Rental executives, Michael Bjornstad and John Moran – who owned and operated Bright Event Rentals which rebranded from Wine Country Party and Events in 2015.

Thus, Bright Event Rentals became the nation’s largest full-service event rental company in 2017 when Classic handed the torch over to them.

Meanwhile, operators on the East Coast such as Peak continued growing to an estimated $100 million in revenue. With the Great Financial Crisis behind the industry, it was only a matter of time that a national scale player would emerge onto the scene.

Cost-Synergies Present with Scale for $1-10M EBITDA Operators

The level of scaled cost and capex synergies that can be pooled between operators in different footprints can be quite large. There’s an ability to standardize labor know-how across the network while applying capex-synergies on vendor relationships that the target may not be privileged to due to lack of volume. Additionally, if you run a $1-10 million EBITDA business there’s likely to be some cross-sell revenue opportunities that a much larger acquirer can apply with larger annual events in or near the target’s footprint. The acquirer gains the logistical and geographic advantage to bring in the extra large tenting without having to acquire warehousing space nor trying to figure out the local labor market. These $1-10 million EBITDA businesses know their footprint forwards and backwards and have key established 30-year customer relationships that just are not leaving their clutches.

Key Supply and Demand Drivers

If you’re a Private Equity group and you’re trying to evaluate the market, it’s important to first understand what the key drivers of the market are. E&PR operators typically have a diverse customer profile mix. Most small mainstreet companies service only local picnic and perhaps smaller weddings events. The larger players will service higher-end customer mixes – larger corporate, wedding, and city & recreational events such as marathons, soccer tournaments, and other sporting venues. Another pretty common customer is a very high-net worth individual who is holding a gala or wedding for a relative on their property and requires tenting needs along with portable bathrooms and quite often other add-ons such as HVAC and electricity. Operators who have larger scale and abilities are able to break into College and High School Sporting events as well as other annual repeat events where there still remains untapped opportunities.

Another major demand driver for the operators who have entrenched University relationships is college admissions. US College Admissions have continued growing despite any COVID-era challenges and are projected to continue growing to 19.5 million students by 2028.

Leveraging Strategic Insights

The current Event & Party Rental M&A landscape is characterized by healthy optimism, as larger Private Equity group are entering the space navigating the myriad of challenges and opportunities this time with a better understanding of the scale synergies that exist among larger regional targets. Several recent major deals such as Bright’s acquisition of Peerless Events and Tents as well as MRE Capital’s acquisition of Curated Events in 2023; and of course, the most pivotal acquisition in the last 20 years, Bright acquiring Peak in 2024, are indicators of market sentiment and catalysts for further activity.

In this dynamic environment, achieving success will be contingent upon adeptly maneuvering through intricacies with lucidity and assurance, thereby guaranteeing a thriving, prosperous future for E&PR acquisitions.