AED Group is for sale. To take the step from the European to the world top, the specialist in audiovisual material is looking for a strong party to help finance its ambitions.
"I'm proud, but also a little sad." Stefan Yee, the founder and CEO of PE Group, has mixed feelings. The investment company has been in the capital of showbiz supplier AED Group since 2007, an atypically long period for a venture capitalist. But that may soon come to an end. The board of directors of AED has decided to put the company up for sale.
AED Group started in 1985 as AED Rent, when 16-year-old Glenn Roggeman decided that he was more interested in lugging light and sound installations than going to school. "In that period, everyone just bought installations themselves, after which they stood idle for more than half the time," recalls Roggeman. "So I set up a rental model."
AED Group is now starting a sales process to find a new major shareholder to guide the company through the next growth phase. The idea caught on. Roggeman's business grew rapidly and soon internationalized to France, Germany, the Netherlands, the United Kingdom and the United Arab Emirates. After which matters such as leasing, distribution, second-hand sales and even the in-house development of material were added. Today, the AED Group comprises more than ten subsidiaries, which in six countries "are the reference in their field, even though they are small Belgians", says Roggeman.
In that growth trajectory, AED has never called on external finance. Over the years, investors did step in, but this always involved a partial exit from Roggeman. Today, the management still owns about 21 percent, the company holds about 10 percent of its own shares and the remaining 69 percent is divided among shareholders PE Group (since 2007), ING Private Equity and Phifin (both since 2011). .
In that structure, AED grew strongly year after year, from a turnover of about 4 million euros in 2005 to about 90 million euros last year. The group then recorded a gross operating profit (EBITDA) of around 24 million euros and an operating cash flow of 32.6 million euros. This shows that the corona crisis, which hit the event sector heavily, has not left any lasting wounds in the company.
AED now wants to continue that long-term growth trajectory with a further substantive broadening of the business and internationalization to other continents. "During the corona crisis, we invested heavily in both extra capacity and infrastructure," says Roggeman. "Everything is ready for a growth jump of another 40 percent."
If I had been an American, we might just be world leaders right now.
That leap is best made with a new major shareholder in the capital, is the analysis of the board of directors. That is not illogical. The normal investment horizon in private equity is four to seven years on average, but AED's outside shareholders have been in the capital for twice or three times as long. "Nothing is mandatory, but now is just a good time to sell," says Yee. "This new phase that the company is entering requires investment and a portion of patience. If we stay put now, it will be another five to six years. We will remain a private equity company, we will live on our exits."
But this sales process, which is supervised by ING Corporate Finance, is about more than just giving shareholders an exit. A larger party - in the audiovisual sector or in venture capital - would also be financially better placed than the current shareholders to realize AED's ambitions. If the group wants to become a global company in its capital-intensive business, a shareholder with deep pockets can only help. "A sale to a major player is a logical next step in the growth story that we have written together with Glenn," says Yee.
Don't get bored
It is certain that the external investors want to exit in the event of a sale. Whether founder Roggeman will do the same is less clear. The CEO says he is keeping all options open. "Everything will depend on the expectations of the new shareholder. If they want to continue with me for the next 10 to 15 years, I am open to that. If not, that is also possible. The interest of the company prevails. I have 16 companies, I will never be bored anyway."
Just like with Yee, a sale will give Roggeman mixed feelings, says the founder. "I am very proud of what we have achieved here, I think I can safely say that we have written a special story with AED. The only thing I find a bit unfortunate is that it is again very difficult to get a to build a global company. To realize that ambition, we have to sell. If I had been an American, we might just be world leaders by now."
One AED is not the other
If AED Group soon gets a new majority shareholder, that party will not immediately own the AED Studios in Lint. That media park, formerly Alfacam, is a separate entity with a different shareholder structure. The studios, where major live shows and Hollywood films are recorded, are only 40 percent owned by AED Group. The other 60 percent belong to Roggeman himself.