Computerlinks a private-equity success story, claims backer
Equistone says VAD a shining example of positive impact private-equity industry can have on mid-cap firms
Computerlinks backer Equistone has held up the distributor as a private-equity success story after agreeing to sell its charge for more than double its purchase price.
Five years after buying Computerlinks for €104m (£89m), Equistone yesterday agreed to flog the VAD to New York-listed giant Arrow for €230m, ending months of speculation.
During Equistone's investment period, Computerlinks saw revenue swell from €540m in 2008 to about €943m last year, with staff rising from 566 to 720 over the same period. Equistone said Computerlinks enjoyed "significant" EBITDA growth under its tutelage, although decline to divulge any figures. Ten new offices have been opened in six countries since it seized the reins.
Recent times have seen some spectacular failures among private-equity-backed channel firms, most notably 2e2 in February and Comet last autumn. 2e2 went under owing eight suppliers more than £1m, while Comt's demise left the taxpayer with a potential bill of up to £50m. This has not helped the reputation of an industry many already rightly or wrongly associated with characters resembling Richard Geer's hard-nosed corporate raider in Pretty Woman.
Perhaps with this at the back of its mind, Equistone used its announcement of the sale to highlight what it claims is a private-equity success story.
Michael Bork, senior partner at Equistone Partners Europe - which claims to be one of Europe's leading managers in mid-market buyouts - stressed that Equistone completely retired the acquisition loan during its investment period.
"Today the company is stronger than ever, is a solid business and extremely profitable in its industry," he said. "Computerlinks is an example of the positive influence of the private-equity industry on typical mid-cap businesses."
Stephan Link, chief executive of Computerlinks, added: "I believe that there are significant opportunities ahead in the IT areas of security, networking, storage and
virtualisation, and we look forward to working with Arrow to explore these."
Equistone also cleared up the mystery surrounding an apparent discrepancy in the Computerlinks revenue figure quoted by Arrow last night. In its press release, Arrow said Computerlinks is on course to post sales of €700m in 2013 - oddly low considering Computerlinks' reported revenue of €943m in 2012.
However, the discrepancy is due solely to differences in reporting principles between the US and Europe, relating to how renewals are reported, a representative informed us. Computerlinks' 2012 revenue number showed under IFRS [International Financial Reporting Standards] gross, whereas Arrow's figure is based on US GAAP, which is lower as the business is accounted for on an agency basis.
In IFRS terms, Computerlinks is actually budgeting for revenue of €1.1bn this year, which converts to $1.47bn, Equistone said.