HIG Europe signs off Bezier MBO

The deal took place via a debt-for-equity swap, which is thought to represent a substantial loss for the firm's former creditors, Lloyds and RBS. HIG also injected new capital via its European Partners fund, which closed on €600m in 2007. Management invested to retain a minority stake.

Bezier Acquisitions, the non-trading newco through which MidOcean Partners acquired Bezier Holdings in 2005, has been put in the hands of receivers Deloitte. HIG therefore acquired the company by liaising with Deloitte and impressing the firm with its speed of delivery and ability to directly acquire Bezier's debt.

The private equity firm was attracted to the company's customer-focused business model and maintains that the large FMCG clients Bezier works with are currently focusing more heavily on their point of sale marketing strategies due to the tough macroeconomic conditions. It therefore views this segment as a counter-cyclical market.

Following the deal, the business intends to invest in recruitment, widening its range of client services and pursuing selective acquisitions. Though synergies exist between HIG's existing portfolio companies Diam, a top-end cosmetics display business, and marketing agency Engine Group, HIG has dismissed claims that it plans to merge Bezier with either of these entities.

Debt
Bayside Capital provided a debt package including a revolving credit facility to support the acquisition. Bezier's senior debt – with a face value of more than £70m – was also acquired, "significantly" reducing the debt on the company's balance sheet.

Previous funding
MidOcean acquired Bezier from Electra Partners as part of a secondary buyout valued at £77.7m in August 2005. RBS and Lloyds provided a debt package to fund the transaction and Electra retained a minority stake. Mark Shaw was appointed to the role of CEO, and in 2006, Bezier went on to acquire point-of-sale material manufacturer Pointer, based in Leicester.

In November 2009, MidOcean restructured the company in a deal that saw additional senior management team members appointed. MidOcean and management, led by new executive chairman David Mitchell, injected £6.5m of fresh equity, while RBS and Lloyds extended the terms of the debt and renegotiated its covenants. Trevor O'Reilly and Alistair Stewart also joined the board.

The aim at this time was to optimise the company's operational efficiencies, accelerate its business development programme and provide a greater client focus.

Rumours suggest that a further financial restructuring was carried out in February 2011, when £11m of loan notes were converted to equity and Lloyds and RBS were each left with 32.5% stakes. MidOcean is said to have maintained 10%, and the management team held 25%.

With regards to MidOcean's achievements at the firm, though it did transform Bezier from a traditional manufacturer to a provider of point-of-sale marketing services, it fell markedly short of its 2005 goal to generate a £200m turnover by 2010 and left the company severely over-leveraged.

Previously, in May 1998, Electra purchased Bezier (then known as Mechoport), as part of a BIMBO deal valued at £53m.

Company
Wakefield-based Bezier is a major UK provider of integrated point-of-sale marketing services. It represents more than 60 brands and retailers and supplies advice across research, shopper marketing, creative campaigning, permanent and tactical point of sale design, campaign measurement, digital marketing, manufacturing and fulfilment.

The company is currently generating sales of £100m, roughly the same as last year, but it expects this number to reduce slightly to around £80m in 2012. It was founded in 1998 and employs 800 people, compared to 950 in 2009.

People
Managing director Paul Canning led the deal for HIG Europe and joins the company's board alongside principal Andrew Steel. Trevor O'Reilly is the CEO of Bezier. Graham Clempson, European managing partner, was MidOcean's representative on the board. Following the deal, David Mitchell will step down as chairman.

Advisers
Equity – Moorgate Capital, Nicholas Mockett (Corporate finance); Kirkland & Ellis, Partha Kar (Legal).
Company – Deloitte (Corporate finance).

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• Media
• Buyouts
• HIG Capital