Insert
Not all investments succeed, even if our strategy to grow a business ultimately creates a company with the potential to grow under subsequent ownership. Our investment in Insert is a case in point. We realised a rare loss on our investment, but we are proud that we stuck with the management through a sharp downturn in its market, safeguarded jobs and eventually sold it to new owners with capital to support its continued growth.
Simultaneous Buy and Build
Duke Street created Insert through two almost simultaneous acquisitions in December 1999.
First we acquired Insert France from the EMAP Group and shortly afterwards bought Publiprox from Hachette Filipacchi Medias. By the end of 2006 we had helped to build a company with turnover of Euros 46 million.
The enlarged company, headquartered in Paris, specialised in selling advertising space in retail sites in city centres across France and through its network of similarly sought-after spaces in Belgium. In addition it provided complementary merchandising and sales support services to clients.
Working closely with the management buy-in (MBI) team, we recognised the company had a chance to build a valuable presence at the heart of city centres thanks to its relationship with retail outlets.
At the time this area was becoming harder and harder for advertisers to break in to as many municipalities had begun tightening up the restrictions on city centre advertising.
The strategy
Against a backdrop of intense competition, the industry was rapidly consolidating, presenting Insert with the chance to grow organically and through acquisition.
Insert’s strategy sought to make the most of this advantage. The company set about improving the quality of its network to attract better clients and improved the look and function of its panels, incorporating new frames and IT to increase their productivity.
At the same time Insert targeted new niche markets – such as the pharmacy sector – and continued to build its presence through selected acquisitions of competitors and related advisory businesses.
Our approach
Several factors were crucial in helping Duke Street acquire the companies that made up Insert.
Our strong presence in France was an obvious help and meant we had good relations with the vendors. When the MBI team heard that EMAP might be willing to sell Insert we were able quickly to open the doors. The Publiprox purchase followed shortly afterwards thanks to an existing vendor relationship.
But we needed to convince the management that we had the experience in information publishing and specialist media sectors to support their growth plans. We also needed to demonstrate our record in buying and building companies, particularly in rapidly consolidating markets.
Our ability to dedicate resources to the deal and to arrange complex financing for the two initial acquisitions within a two-month timeframe was also crucial in winning their backing.
Support through tough times
The timing of this deal, however, was not the best from Duke Street’s point of view. We bought and built the company at the top of the market and held on to our investment as the advertising market slid into a steep slowdown following the bursting of the dotcom bubble.
We were proud that we maintained our investment, safeguarded jobs and eventually managed to sell it to a better-capitalised group even though our own investment had become loss-making.