By Phil Soar, Chairman of CloserStill Group and Nineteen Group
Warren Buffett retired on 31 December 2025, aged 96. For half a century he has been regarded as the Prince of Stock Investors. His investment firm, Berkshire Hathaway, has grown in value from circa $50 million in 1965 to $1.08 trillion in 2026 – a shareholder return of a rather impressive five million percent.
What is intriguing is that he never invested in the trade show industry – intriguing because our industry is exactly what Buffett always said he was looking for.
He was regularly described as a “value” investor – meaning he found good companies valued at less than their long-term worth. And sometimes he was called a “growth” investor – the meaning of which is fairly obvious.
But as The Economist says, he dislikes both those terms. There is one term Buffett did not disdain, however. “One piece of jargon he couldn’t talk about enough is ‘moats’.”
Added to that, he always sought out businesses where the cash flow tends to come in upfront.
Does this sound like a business model we are familiar with? It is an almost perfect definition of a serious trade show group…
Where Buffett found moats
We can come back to trade shows a little later. But where did Buffett find the “moats” he sought?
By “moat” he meant that a business had built, or found, a defensive structure which wrapped itself around its product and profitability and which made it very difficult for competitors to breach.
One obvious way was understanding consumer taste, such as Apple, where “buyers” had become so committed to the product that they were very unlikely to stop buying. Another big investment over many years was Coca-Cola, where the habit of buying was so permanent that it was very difficult to disrupt. He invested tens of billions in both. It is interesting that in both these cases there was no monopoly. Apple was up against Samsung/Google for mobile phones, and Coke had Pepsi to contend with. But Buffett’s view was that both products were so implanted in the public brain that their “moat” was permanently deep and strong. But it also showed that monopoly is not a necessary precursor of a moat.
The industry which he said had the deepest moat was cigarettes and tobacco, where a combination of addiction, complex distribution channels, the ability to raise prices and government legislation almost guaranteed profitability. As it was said: “You make them for a penny and sell them for a dollar. What’s not to like.”
Tobacco moats could be breached
But tobacco is one area where moats could eventually be breached – in this case by public opinion, health legislation and tax policy. Other products which once appeared to have very deep moats were US car manufacturers, which were thought to be impervious to non-US competition until the late 1960s. The threat was external – Ford, General Motors and Chrysler had never seriously considered that their highly individualistic market (have you ever seen a Chrysler tail-fin of the 1950s?) could be upended from outer space. But a new younger generation, rising oil prices and the febrile inflation of the 1970s suddenly confronted them with small Beetles and Toyotas, threats which they have never been able to counter since. In 1960 Ford and GM had 75% of the US car market. In 2025 it was just 30%.
In the UK (and in the US) local evening newspapers appeared to be untouchable and impossible to compete against, until they weren’t. Each major city had one. The moat and the massive profits were a consequence of controlling the market for local advertising – situations vacant, used car sales, even births and deaths. There was no where else to advertise such local things to a city’s population. In this case it was a completely unexpected and arguably unpredictable technology (the “InterWeb”) which almost overnight stole away their local advertising. As late as 1994 DMG were prepared to pay £125 million for the Nottingham Evening Post, then selling around 140,000 copies a day. Within a generation that had fallen to no more than 8,000.
Legislation and regulation can create moats
This is not legislation in the sense of creating a true monopoly – like the East India Company in the 17th century, or the royally-decreed monopolies which were typical of the Spanish and Portuguese empires. But rather they are “moats” which regulation protects. Buffett invested heavily in Bank of America, one of the USA’s largest. The rigid government regulation of financial entities has always made it very, very difficult to build a large bank – and the giants like Wells Fargo, JP Morgan and Citi have been largely unchallenged for many decades. The same is, of course, true in the UK.
The same thing applies to Visa, American Express and Mastercard, which so dominate the credit card market that 98% of all credit card transactions in the USA (by value) use one of the three (Buffett invested billions in all three). The comparable number worldwide is circa 85% – Japan and China having domestic cards. These financial products are so dominant that it remains almost impossible to see how they can be disrupted (though they no doubt will be one day). Even electronic processes like Google Pay and Apple Pay have not succeeded in creating “new” banks. Despite many commentators arguing that they would, the reality was that, in the end, they became partners rather than competitors.
And moats can be created by legislation. Railway monopolies in most European countries are a good example. Such monopolies do not encourage innovation or efficiency – look at the situation in Germany or the regular strikes in the UK. Moats and monopolies are not of necessity a good thing. Lack of competition can drag economies down – the absence of a good rail service from Lancashire to Yorkshire has been bemoaned for generations. A century ago (you might not be aware), you could travel from Manchester to London by 4 different routes – to Euston, Marylebone, St Pancras and King’s Cross – the competition led to faster trains and excellent service. Nowadays Euston is the only option, and even then the only operator recently refused to allow any passengers to join its 7.00 am service because it was “inconvenient”.
The parallel with exhibitions – Buffett’s philosophy of cash up front
This is regarded as Buffett’s other major insight or investment philosophy.
Starting in 1967, he bought insurance companies – the best-known being GEICO. Policyholders pay annual premiums in advance (we all do it) and that provides a continuous cash float which then can be invested in other businesses. And if the insurers make a profit – well, that’s almost a bonus.
Our business is similar. Exhibitors (the bulk of our revenue) and delegates pay upfront but many of our costs are not incurred until the time of an event or afterwards. It is not as pure a cash device as insurance, but it is similar. And the effects can be seen in the annual accounts of any of our large trade show companies. Generally, and given that we are usually expanding year on year, we generate £11 of cash for every £10 of profit. That is true of very, very few large businesses.
Why Buffett should have invested in trade shows
Why? Above all else, because we build massive moats.
One way of illustrating this is to look at the biggest trade shows – by revenue – in the United Kingdom in 2005, a generation ago, and how their moats protect them. Data is from available AEO records.
UK biggest events in order:
Spring Fair (EMAP)
World Travel Market (Reed)
Interiors (UBM then CMP)
Autumn Fair (EMAP)
IFSEC (UBM then CMP)
DSEi (Reed)
BETT (EMAP)
ATEI/ICE (Clarion)
London Book Fair (Reed)
And if we look at the biggest trade shows in the UK in 2026, we still see pretty much the same list. The top four are now DSEi, World Travel Market, Spring Fair and Safety and Security NEC (which now occupies the IFSEC slot). Of the others BETT, London Book Fair and Autumn Fair are still top ten and ATEI/ICE is no longer there solely by virtue of having moved to Barcelona.
Interiors and IFSEC we can cover later.
So how have we built these moats?
In three simple ways:
1. The slot system. By and large, major venues will not allow new events to compete directly with their large cash cows (this is rarely contractual, much more custom and practice). In Germany, Italy, China and many other countries, this is de-facto legal – as the venues own the big events as well. The UK and the US are different with venue and organiser businesses economically separate. Even in the US, with its multiplicity of venues, the great majority of the bigger events are run in Vegas or Orlando, with the Javitts and Chicago following on behind. By and large, it is almost as hard to get a large competitive event going in these four cities as it is in Paris or Germany. Most countries only have one or two large venues – Germany is the exception. This means that anyone wanting to build a significant new event has very few options – if they are blocked from the two major venues it is difficult to know where to go. The major building blocks of the moat are here – the slot system.
2. Good organisers protect their assets – their shows, their brands. They spend on content, on meetings, on all those add-ons like exhibitor parties and free coffee, and on marketing and advertising. This is no different from the brands Buffett does invest in. Coca-Cola doesn’t just sit back and count the cash – they advertise, advertise, advertise, they promote in-store, they promote in bars. That way they invest heavily in keeping potential competitors out in the cold. And take Visa, Mastercard and AMEX – with 98% of all credit card transactions in the USA already you might ask why their names are always in front of you, promoting, sponsoring, taking the back pages of newspapers and magazines, all over Olympic logos, popping up everywhere on line. For the same reasons – to maintain their positions, to make it very hard for any new product to get a foot hold. And they can afford to – both Visa and Mastercard run at 60% margins even after all these costs.
3. The subscription system – otherwise known as the rebook. This has only become common in the trade show world in the last two decades, and there are many companies which still do not regard it as fundamental to their business model (the RX position is an interesting one). But the benefits (there are some drawbacks as well) are obvious. If a sales team can contract 80% of their exhibitors at a large show, then they are creating a mountain (or a very high moat) for any new competitor. If the show is a major one in a major sector, then 80% of the exhibitors will represent a very large proportion of the available customers for any other event – and they are already signed up a year or two years ahead. And there may be no open venue to go to either. And we all know that exhibitors much prefer one large show to a series of smaller, competing ones. The question is often asked: “Well why don’t they start at a smaller venue like the BDC or Liverpool?” The answer is simple. They may be successful, but they are still blocked from hitting the big bucks by moving to a larger venue.
Can our moats ever be breached?
The simplest answer is by the organiser making a big mistake.
Of our Top 9 Shows from 2005, just two have disappeared – Interiors and IFSEC. Both were run by UBM and both switched venues from the NEC to Excel, presumably after financial inducements.
In both cases UBM left a hole; they did not create a “blocker” in the NEC to stave off competitors. In the case of Interiors, The Furniture Show slid straight into the hole and Interiors at Excel was dead in 18 months. IFSEC took a little longer to die, but the reason was the same. A new “Safety and Security” show at the NEC did the same job as IFSEC, plus some very clever tradecraft strategies to make it extremely appealing to exhibitors. In 2026 it will have a turnover larger than IFSEC ever had.
The other reason is external change – and this is most common in IT. One good example is COMDEX, which was the largest show by revenue in the world in the 1990s. It did become expensive, and did not adapt quickly enough to the rapid changes brought about by the internet (which also led to the stock market tech bust of 2000-2001, which is when COMDEX died).
External change can be a threat
A UK example is PC World, which was the biggest IT show in the UK by some margin back in the 1990s. It did what it said on the tin. It was all about trying to decide which of the many PCs on offer were right for your company, along with a range of software offerings from the likes of Microsoft.
There was no simple mistake by PC World as such, but it was rapidly outflanked by a changing marketplace. PCs suddenly became commoditised (Dell was the major driver) and it was no longer a matter of picking a particular PC because they were all pretty much the same. It became a matter of price and you don’t need a trade show to compare prices. The same thing happened in New York, where Blenheim had a massive PC Expo event annually attracting over 100,000 people. It disappeared almost overnight as PCs became commoditised.
By and large our major UK events have fortified their moats. It is not easy to see how any of the biggest ten or fifteen shows will lose their positions. The unexpected may come along; it sometimes does. But by and large their management teams understand why they are secure and do what’s necessary to ensure that their moats are not breached.
It remains a mystery why Warren Buffett never followed his own advice and bought the perfect example of a business built on moats. It’s probably too late now.
Source: www.exhibitionworld.co.uk
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