d&b Group CEO Amnon Harman has spoken exclusively to Headliner about the acquisition of the company by private equity firm Providence, the trends shaping the pro audio market, how innovation across the immersive sector is pushing the industry forward, and what the future holds for the German loudspeaker giant.
This week (July 10) it was announced that d&b Group would be purchased by Providence for an undisclosed fee, as private equity outfit acquired the company from previous owners Ardian, also a private equity firm. Discussion around the sale of the company initially began in early 2020, with the pandemic delaying negotiations until this year.
Following bids from numerous parties, d&b agreed to sell to Providence, with the company’s knowledge of the pro AV industry and significant international reach cited by Harman as key factors in the decision-making process.
Here, Harman outlines what the acquisition means for d&b, his expansion strategy for the next five years, its move into new market segments and more…
How did this acquisition come about?
As you might know, we are now in our third generation of private equity. So the first sale of the company to a private equity house was about 15 years ago. We then had a constant cycle of changing owners every four or five years. When the owners initially sold the company it was at a revenue of €20 million. Today, we are not publishing our exact revenue numbers, but I can tell you that since 2005 we have grown at a double-digit rate per year with regard to revenue. We are outgrowing the market, so we are taking market share and of course we are working on a profitability level that is appealing to private equity investors.
When Ardian invested in the company their intent was to support our growth strategy, which at the time was around growing the business internationally and growing our segment focus, especially installation. Typical to a PE investor, after four years of having supported the development of d&b, it was their business model to sell again. That’s what we wanted to look at in early 2020, so we had a structured process to sell, but then Covid hit. So, we had to abort almost at the end of the process. Then everyone in the market had to cope with the crisis. We did this quite well and recovered quicker than the market. On that basis we decided to make another attempt, so we prepared for the sale and over five months we went through the same process. We had kept in contact with all of the bidders and Providence was one of those. They already knew us quite well because of their due diligence at the time, so they had to bridge the gap to see what happened during the pandemic with us.
The pandemic allowed us to make changes that we probably wouldn’t have done in normal times. So, a lot of the strategic projects that I wanted to initiate, I did during the pandemic. And we did everything – we opened up d&b solutions, we expanded our immersive story, and we have created a new vision of how the event markets will develop in the future and how we will address this as an event technology company. We transformed the business into something that is not completely different but is still different to what you saw before.
And then Providence came back and understood what we were doing. They were excited about how we recovered and our vision and strategy for the future and the discussions with them went very well. They are good people, they have experience in the market with some investment in our space, and therefore it was a perfect match.
Can you elaborate on what made Providence the right fit over the rest of the bidders?
Number one is really the understanding of the market, because you can already focus on strategic discussions as they have a solid understanding of the market. Both on the technology network side and on the media and entertainment side there are a lot of overlaps with where we are. And they understand the dynamics of the market. That was a very big advantage they had.
They also have a very strong footprint in the US, which will help us there. They have international reach. They are a very global organisation, and they are at a size that can really support us in the future. And my conviction is that thing only works when people work well together, so they understand and appreciate the d&b culture, they understand how our management ticks, and there is an appreciation of what we do. They aren’t bringing people in to try to do the job better than we are doing. They are supporting us and that was the feeling I had in 2020 and it was confirmed in our recent due diligence process.
What does the acquisition mean for d&b’s business? Are there any aggressive expansion strategies coming, or notable differences in the way the company operates?
A financial investor is a partner for time. Providence saw where the company is coming from and what our strong points are, but what they really invested in is the future. They invested in our strategy and the management team. That’s what they are backing. And at a certain point it’s clear to them and to us that they will sell their stake again. So, we’re not developing what the investor wants, we are developing a long-term vision for d&b so that we can develop as a business, and I’m trying to find the right partner to support us in that. Therefore, you should not expect any drastic changes. But, I’m so excited because I’m in a position where my vision is formulated, we have a strategy for it, I have a management team in place that I can fully rely on, I have an investor by my side that is taking this new era with us, and I’m just so motivated for this next step.
