Navigant Buy Widens Reach

A recently acquired meetings and incentive management firm will be a primary engine powering the Navigant Performance Group's strategy of increasing its share of corporate meetings management clients, particularly pharmaceutical firms.

Officials expect the acquisition of Parsippany, N.J.-based Incentive Connections Inc., completed in February by NPG's parent company, Navigant International, but never publicly announced, will offer Navigant's nearly two-year-old meetings unit access into geographic areas and industries where it currently has little presence.

ICI this month is expected to change its name to NPG Parsippany. Financial terms of the deal were not disclosed.

"They will be integrated into the Navigant Performance Group," Navigant chief accounting officer John Coffman said. "They had a wonderful management team, good operations and it's consistent with our corporate travel management operations."

The acquisition should further two stated NPG goals, said president Jonathan Danforth: to add more corporate meetings management clients to join NPG's roster of incentive travel clients and give the company a larger presence in pharmaceutical meetings management. The latter goal is best accomplished through acquisition, he said, as opposed to simply trying to develop a client base from scratch. ICI, as is typical of New Jersey-based meeting and incentive firms, boasts a roster of such clients.

Collectively, the pharmaceutical industry has reduced meetings expenditures less drastically than other industries, offering their preferred meeting suppliers rather steady streams of business. "Pharmaceutical is an industry that does a lot of meetings, and they're heavily concentrated in the corridor between northern New Jersey and Philadelphia," Danforth said. "But there's a different thing about pharmaceutical: If you go in and try to crack that egg, you won't be able to. They want experience in the vertical, and ICI has 10 to 15 years of experience there."

ICI has long-term contracts with several pharmaceutical companies, Danforth said, and also handles a number of large, adhoc meetings. Typically, he said, ICI is part of a corporation's list of preferred meeting suppliers. "Large pharmaceuticals don't go exclusively with one firm," he said. "Their preferred supplier list is designed to spread the risk, rather than go with one supplier exclusively."

NPG's other goal, Danforth said, is to expand the percentage of meetings management business of the firm's total business mix. "The potential there is huge," Danforth said.

Yet, the ICI acquisition already has had an impact on Navigant's bottom line. Navigant, in announcing its first-quarter earnings, cited the ICI acquisition as a key driver of its performance, at least for that time period. "Our improved results reflect the anticipated upturn in corporate travel, as well as the acquisition of a meetings and incentive company with significant first-quarter seasonality," said Edward Adams, Navigant chairman and CEO, in the earnings release.

However, Coffman said ICI's annual revenue does not meet the federal Securities and Exchange Commission's threshold that requires such publicly traded companies as Navigant to publicly announce such an acquisition. That the acquisition could have such an impact on the first-quarter results of a company the size of Navigant is largely a function of ICI's accounting practices, Danforth said, noting the full-year financial impact will be less notable.

Since the company was founded, Navigant has relied upon acquisitions to grow in the corporate travel and meetings management marketplaces, a strategy that led to the ICI purchase. "We weren't exactly going out and looking for meetings and incentives companies in particular, just strong candidates for acquisition, and they came across," Coffman said. "In terms of acquisitions, we do not distinguish between corporate travel management and meetings and incentive companies. We're just looking for good agencies that fit well with us. We did have an interest in enhancing our meeting and incentive operations, as the last few acquisitions had been on the corporate travel management side."

One theoretical advantage for NPG in its attempt to attract meetings business is access to its parent company's roster of corporate travel management clients. "We have leveraged the Navigant corporate travel relationship across the U.S.," Danforth said. He pointed to two telecommunications firms that are Navigant corporate travel clients, Denver-based Qwest Communications International Inc. and Bellevue, Wash.-based T-Mobile USA Inc.—the latter of which represents "multiple millions of dollars of business on the meetings side," he said—as two examples of NPG making inroads into the Navigant client base.

On the other hand, Coffman said the potential to sell Navigant's corporate travel offerings to ICI's group and meeting clients was not a key part of the deal. "There's always that thought, but it did not play into the deciding factors," he said. "We're seeing a few more bids from corporations looking for both corporate travel management and meeting and incentive services, and having a strong operation will get our feet in those doors and get us more bids. Typically, though, there are still two different buyers for those services. In the future, there will be more cross-selling, but it's still a bit premature."