At the time of its buyout, Ludgate was a successful and rapidly growing financial and corporate communications consultancy. It specialised in investor relations, corporate relations and personal finance communications and was a division of a larger advertising and public relations firm.
However, its management team felt that it would have greater scope for growth as a separate business from its parent. The team had a proven ability to generate growth and the business had a good, cash generative track record.
Following the buyout led by Cinven’s investors, Ludgate pursued a strategy of organic growth in complementary areas of business and expansion overseas. As the assets of the business were its staff, Cinven devised a structure for this investment that recognised its inherent risks and also the opportunities it presented. Although in March of 1991 the market in which Ludgate operated was not particularly favourable, the business was positioned to benefit from future expected growth when it occurred.
The strategy proved to be a successful one. Ludgate generated good growth and in June 1996 Cinven sold its interest to a private equity buyer.
Multiple returned on investment: 4.3x