Apax Partners

Yell is a leading provider of classified advertising directories and associated products and services, principally to small and medium-sized enterprises and consumers in the United Kingdom and United States. It operates in the classified advertising market through print, telephone and Internet-based media.

Yell comprises one of the strongest brands in UK media as well as one of the fastest-growing directory businesses in the world, in Yellow Book in the US. Its products and services generate business leads by connecting buyers and sellers through an integrated portfolio of advertising solutions.

The company’s products include:

- Yellow Pages, of which 27.9 million copies with paid advertising for 475,000 businesses were distributed in FY04

- Business Pages, of which 2.2 million copies with business-to-business advertisements and listings were distributed in FY04

- Yellow Pages 118 24 7, a UK 24-hour telephone-based operator-assisted directory service with a database of approximately 2 million product and service providers

- Yell.com, a leading site for finding UK businesses, shops and services online, supported by a database of around 2 million business listings   

- Yellow Book USA, founded in 1930, which published 536 directories and distributed 72 million copies in 41 US states plus the District of Columbia in FY04

-Yellowbook.com, Yellow Book USA’s on-line directory service

The transaction became possible in the spring of 2001, when BT explored options to reduce its debt burden and decided to sell Yell, the leading directory publisher in the UK.  BT required swift execution and ready cash. Following a compressed sale process, Apax Partners, together with Hicks, Muse, Tate & Furst, acquired the business for £2.14 billion.

John Condron, chief executive of Yell, said: "Our joint ownership by Apax Partners was a very successful relationship, forged at an exceptional time in Yell’s development.  It provided strong support for us as we grew our business both organically and through a major acquisition in the United States. At the same time the relationship allowed us considerable management freedom to enhance the value in our company in distinct ways appropriate to Yell."

After the takeover, Yell’s management and its backers boosted the value of the business in the following ways:

  • Apax Partners brought an in-depth knowledge of the sector because it had previously backed a management buy-out of Thomson Directories, the number-two player in the UK.

  • The management and investors focused on revenue growth through the introduction of new products sold through a world-class sales force, which was able to drive significant growth in Yell’s UK business.

  • Profitability was enhanced. Yell’s US business, Yellow Book, almost doubled its margins and Yell.com moved into profit following a period of investment.

  • The implementation of an aggressive acquisition strategy through which the management team identified, executed and integrated significant acquisitions, including McLeod Directories and National Directories in the US for $600m and $69m respectively. Apax Partners and Hicks Muse supported the acquisitions with further equity investments.

Apax Partners, together with Hicks Muse, supported their investment in Yell by:

- Executing the purchase from BT in a matter of weeks. 
- Backing the Yell management team in their US acquisition strategy
- Working closely with management and advisors to prepare a clear cut case for the public markets

On July 15, 2003 Yell listed successfully on the London Stock Exchange at 285p a share, raising £1.14 billion in the largest Initial Public Offering in the UK for two years, and, at the time, the largest ever IPO of a private equity-backed business globally. The total value of Yell at the time of the IPO was £3.35 billion.

The IPO provided Yell with a public market currency, allowing it to pursue further acquisitions and gave its private equity backers an opportunity to realise the value created since the buyout and return capital to their investors. It also gave the company’s management an opportunity to realise part of their stake in the business and gave new investors a stake in the future success of a strong business.