These trends bode well for asset-based lending to companies that provide professional rental equipment for television, movie and commercial productions as well as live outdoor events, advise Tiger Group’s Jonathan Holiday and Jason Rae. Asset values in the pro audiovisual sector are on the upswing—from high-end digital cameras to lighting for live events, write two Tiger Group executives in a trend-analysis piece for ABL Advisor.
The gains are largely due to the restart of productions as well as the rebounding U.S. economy, write Jonathan Holiday, Director of Business Development for Tiger’s Commercial & Industrial division, and Jason Rae, a Managing Director of Tiger Valuation Services. However, they caution, it is unclear whether the rise of the delta variant will have a deleterious effect on indoor concerts. “If that happens, demand for related production equipment could certainly be impacted.”
In the piece, “Audio/Visual Asset Value Rebound Highlights Sector’s Resilience,” Holiday and Rae enumerate positive signs for asset-based lenders working with pro A/V rental companies. The executives also expressed optimism about new opportunities moving forward.
“For example, the ‘content boom’ of TV and movie production—for both Hollywood studios as well as streaming services such as Netflix, AppleTV+ and Amazon Prime Video—continues to accelerate,” they write. “Indeed, some of the leading equipment rental companies are as busy as they’ve ever been.” Meanwhile, the live-event business is bouncing back as crowds return to sporting events, festivals and more.
Having survived the pandemic, pro A/V rental companies may now want to raise capital to reinvest in their operations by acquiring equipment and/or competing firms, add Holiday and Rae. Prominent A/V companies are already commissioning appraisals to better understand their strategic options. Recent examples of the latter include Tiger clients representing North America’s largest lighting firms, and a leading A/V rental house. During the past 24 months alone, Tiger had appraised more than $300 million at market value of professional A/V gear for
major stakeholders in the industry, they noted.
In covering the experience of Tiger Commercial & Industrial’s A/V practice over the past couple of years, the executives emphasize the resilience of the North American A/V business.
By the end of 2020, Tiger’s total dollar volume from A/V auctions, private treaty and other sales had climbed 37.9 percent over 2019 levels, including a 21.2 percent increase in lots. Bidders came from across the United States and 21 countries.
“The sell-through rate was nearly 100 percent,” Rae and Holiday report.
A good portion of those sales were of excess equipment being liquidated by healthy A/V rental companies that needed to make room for new gear. Others, though, were rooted in the hard times that befell live-event production companies during the worst of the pandemic. In November 2020, for example, Tiger C&I ran a three-day online auction event for Toronto-based Westbury National Show Systems, which had been Canada’s second largest, full service live-event rental production company.
In contemplating whether to loan into the professional A/V sector, asset-based lenders need to consider whether the borrower conducts live events or serves clients in TV and film production.
“If the former, then at least for now the question of whether those events are held indoors or outdoors may be relevant. But with respect to TV and film production, all signs point to robust and even accelerating growth.”
The full column is available at: www.abladvisor.com
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