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Venture capital family business buy-outs: Europe’s top 10

Most of us are familiar with the statistics illustrating family businesses' mistrust of venture capital. Just 0.9% of UK business families turn to this sector for development finance, according to Manchester Business School, as opposed to the 72% who stick to bank loans.

There are no figures to demonstrate our sector's use of venture capital as an exit route, as in a management buy-out or simple sale to these non-bank capital providers. This is in part due to the lack of disclosure among families and capital providers. Families In Business presents the first ranking of Europe's ten biggest venture capital-backed family business buyouts, from 2000-2004.

Ranked by deal size, the findings reflect a change in attitude strongest on the Continent, particularly in Germany, where the new Basle II margin requirements will make it expensive for banks to lend.

It is no secret that venture capitalists seek to make good returns in short-term horizons, but the findings show that many high-profile families have put their trust in them, and come out on top.
 
Families In Business thanks Initiative Europe for providing data to verify our findings.

1. Safilo
The world's second-largest wholesale eyewear producer conceded an undisclosed stake to CSFB Private Equity for €1.5bn in January 2003 following a couple of shaky years, after a de-listing from the Borsa Italia as part of the family's 2001 30% share buy-back offer. The company is managed by second family generation, Vittorio Tabacchi. In Q1 2004 reported turnover up 13% year-on-year at €26m.

VC/equity syndicate    CSFB Private Equity
Year                               2003
Final size (€m)            1,500
Country                          Italy
Family                           Tabacchi
Percentage sold          Minority stake

2.Auto-Teile-Unger
Private equity house Doughty Hanson bought a majority stake in Germany's leading specialised auto repair and parts chain ATU last June in a deal worth a reported €1bn. Founder Peter Unger and his family retained 19% of the company, which in 2003 had a turnover exceeding €1bn and more than 12,000 staff. Doughty Hanson want to take it to market before 2007 and double the number of stores to 800 by 2014.

VC/equity syndicate    Doughty Hanson
Year                               2002
Final size (€m)            1,000
Country                         Germany
Family                           Unger
Percentage sold          79%

3. Weetabix
The George family gave Hicks, Muse, Tate & Furst its best-ever Christmas present last year when it sold Weetabix for £642m. Third family generation and chairman Sir Richard George believed the company was unable to compete at its existing size with other cereal companies for the supermarket shelf space it wanted. Hicks, Muse aim to fold Weetabix into Premier Foods, which it will look to float.

VC/equity syndicate    Hicks, Muse, Tate & Furst
Year                               2003
Final size (€m)            963
Country                         UK
Family                           George
Percentage sold          100%

4. Linpac
UK-based paper-and-plastic packaging supplier LINPAC Group sold a majority stake to Montagu Private Equity for £860m last June, structured in part as a management and employee buy-out. The Cornish family-owned group, which has supplied clients including McDonald's and Harley-Davidson, felt it needed equity assistance to assist the growth it sought, having reported revenues of £1.2bn at year-end 2002.

VC/equity syndicate    Montagu Private Equity
Year                               2003
Final size (€m)            860
Country                         UK
Family                           Cornish
Percentage sold          100%

5. Brake Brothers
US private equity house Clayton, Dubilier & Rice (CD&R) bought out the UK's Brake family in September 2002, for about €804m. Brake Brothers is the UK's largest wholesale frozen food distributor and saw a turnover of £1.3m in 2001, the last year for which accounts are available. CD&R said it aimed to make Brake Bros a conduit for its place as a leading pan-European foodservice distribution business.

VC/equity syndicate    Clayton, Dubilier & Rice
Year                               2002
Final size (€m)            789
Country                          UK
Family                            Brake
Percentage sold          100%

6. Sulo Group
Credited with the invention of the modern-day 'wheelie bin', SULO Group is one of Germany's leading waste management and disposal companies. In January, the Neuhaus family sold 100% of the shares in its 114-year old business to US private equity giant Blackstone Group and mezzanine finance providers, Apax Partners. The deal had to be cleared by the European Commission on competition fears first.

VC/equity syndicate    The Blackstone Group/Apax Partners
Year                               2004
Final size (€m)            475
Country                         Germany
Family                           Neuhaus
Percentage sold         100%

7. European Homes
One of France's leading independent house builders and a specialist in developing villages, the founding family sold an undisclosed stake to NatWest Equity Partners in 2000 for around €396m in a management buy-out. NatWest's portfolio was later sold off to different managers. UK private equity house Bridgepoint Capital now manages this investment, which last year saw sales of €104m.

VC/equity syndicate   NatWest Equity Partners (now Bridgepoint Capital)
Year                              2000
Final size (€m)           396
Country                        France
Family                          Unknown
Percentage sold        Undisclosed

8. Gardena Holding 2000
Garden irrigation and maintenance tool manufacturer Gardena was de-listed from the German stock market after nine years when the founding Kress/Kastner families sold out to private equity house Industri Kapital for €312m, citing the need for growth capital. The firm has in the past received acclaim for its designs from many quarters, including New York's Museum of Modern Art.

VC/equity syndicate   Industri Kapital
Year                              2002
Final size (€m)           312
Country                        Germany
Family                          Kress/Kastne
Percentage sold        Undisclosed

9. Mivisa Envases
The leveraged buy-out of Spain's largest food canning company from its founding family was the country's biggest private equity transaction in 2001, valued at €284m. The two buyers, Suala Capital Advisers and Paribas Affaires Industrielles created a single shareholder. Misiva Envases is credited with having been one of the first European companies to start manufacturing 'easy-open end' can-tops, in 1981.

VC/equity syndicate    Suala Capital Advisers, Paribas Affaire Industrielles
Year                               2001
Final size (€m)            284
Country                         Spain
Family                           Unknown
Percentage sold         100%

10. Grupo Esmalglass
Spain saw one of its largest management buy-outs of the year when the world's leading ceramic glaze manufacturer, Grupo Esmalglass, was sold to 3i. The controlling Colonques, Soriano and Casañ families had decided to concentrate their investments in sister company, Grupo Pocelanosa. The incumbent management became owner-managers of a company with consolidated turnover of €166m in 2002.

VC/equity syndicate    3i
Year                               2002
Final size (€m)            250
Country                         Spain
Family                           Unknown
Percentage sold         100%

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