Equistone acquires ITG from BDC

Kenny Wastell
12 October 2017

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Equistone Partners Europe has acquired a majority stake in UK-based marketing consultancy and data analysis business Inspired Thinking Group (ITG) from Bridgepoint Development Capital (BDC).

Financial details of the transaction remain undisclosed, though Equistone is currently investing from its fifth fund, which targets buyouts in the €50-500m range.

It is understood that BDC generated a 3x return from the transaction.

During BDC's three-and-a-half-year tenure of ITG, the company acquired planning and creative consultancy Vitamin in 2015 and electronic customer relationship management business Creator in 2016. The consolidated group generated a turnover of around £90m in the year ending in August 2017, according to a statement, up from £43.2m in the year prior to BDC's initial investment.

Under its new owners, ITG will undertake an international growth strategy and expand its range of services.

The transaction is the third time the business has been partially owned by a private equity firm, having originally been backed by Livingbridge seven years ago.

Equistone's fifth fund was 67% invested as of March 2017, according to unquote" data, and the GP expects it to be 80% deployed by the end of the year, a source close to the situation recently told unquote".

Debt
Lloyds Bank and HSBC provided a debt package to support the transaction.

Previous funding
Livingbridge invested £3.2m in ITG in June 2010 to support the company's acquisition of Total Marketing Services (TMS), according to unquote" data. Capital for the transaction was provided by Baronsmead VCT.

The purchase of TMS gave ITG access to MediaCentre Software, a portfolio of multi-channel marketing production and support services.

In April 2014, BDC acquired the business in a deal valued at £28m. The transaction generated a 3.4x multiple for Livingbridge's Baronsmead VCTs, equivalent to an IRR of 40%.

Company
Founded in 2009, ITG provides marketing consultancy and data analysis. The business has developed a marketing resource management software platform called MediaCentre and offers digital marketing services, electronic customer relationship management, a content creation studio, print management and strategic planning, in addition to having a creative department. Its customers include Heineken, Audi, Marks & Spencer, KFC, Renault, Virgin Trains and Puma.

ITG has a headcount of 600, with 220 in its Birmingham headquarters and the remainder across operations in the US, mainland Europe and London. Its European operations generated a turnover of £76m in the year ending in August 2016, with a profit before interest and tax of £4.3m, according to publicly available documents.

People
Equistone Partners Europe – Paul Harper (partner).
Bridgepoint Development Capital – Adrian Willetts (partner).
Inspired Thinking Group – Simon Ward (CEO).

Advisers
Equity – Clearwater International (corporate finance); Eversheds Sutherland (legal); PwC (tax, financial due diligence); EY (financial due diligence); AMR International (commercial due diligence); Confido (IT due diligence); Marsh (insurance due diligence).
Vendor – Catalyst Corporate Finance (corporate finance); EY (financial due diligence); CIL Management Consultants (commercial due diligence); Ropes & Gray (legal).
Management – Catalyst Corporate Finance (corporate finance); Parisi Tax (tax); Thinking Legal (legal).
Debt – DLA Piper (legal).