Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:

• They bought a business in 2008 just before the crash, but still made ~$1 billion
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• How to buy an accounting business (without being an accountant)​
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🔑 Making ~$1 billion buying a business in 2008

Imagine buying a business in February 2008, just months before the global economy melted down.

Anyone who did that must have lost a fortune, right?

Not in this case.

Today we are looking at the deal that PE firm Hellman & Friedman (H&F) struck in 2008 to buy Getty Images.

At the time, the media industry was about to pivot hard from print to digital.

Countless newspapers, some of Getty's biggest customers at the time, were going bankrupt left and right.

But H&F spotted an opportunity to evolve a traditional stock photo service into a digital content leader.

Let's dive in to the deal and see what we can learn.

Deal Terms & Structure

• H&F acquired Getty Images in February 2008
• The leveraged buyout was valued at $2.4 billion
• Deal was structured as a take-private transaction, delisting Getty from the New York Stock Exchange.
• H&F committed $1 billion in equity
• $1.4 billion in debt backed by Barclays Capital, GE Commercial Finance, and RBS Greenwich Capital.
• Shareholders received $34 per share in cash - a 55% premium over the January 2008 stock price.

This deal was classic LBO: Use debt to amplify returns while minimizing upfront capital.

H&F's confidence came from Getty's strong cash flows and market position. Even during dangerous times in the market, H&F felt confident in Getty's business.

Operating the Business Post-Acquisition

Once in control, H&F accelerated Getty's transformation from a legacy photo archive into a "comprehensive digital content platform".

They focused on:

Consolidating the stock image space

• They did a series of tuck-in acquisitions of stock image companies to grow their content library.
• For example: In February 2009, they acquired Jupiter Images for $96 million, which integrated sites like stock.xchng and StockXpert, adding millions of affordable stock photos and graphics.

Tech upgrades

• Moving the catalogues online for anyone to purchase stock images, rather than only selling to big publishers directly

Finding new ways to monetize images and visuals online

• They expanded to new markets and broadened the product offering from images to graphics, videos, music, and other forms of media.

Other acquisitions, including a European-focused stock image business, helped consolidate fragmented markets.

By 2012, Getty's archive had ballooned to 80 million stills and illustrations, all digitized.

Here are some of the other changes they made:

• Invested in Getty's online platform for better search, browsing, and licensing. Users could now filter by resolution, rights type (rights-managed vs. royalty-free), and even custom needs for corporate clients.
• Grew online traffic to 2.3 billion annual searches across sites serving more than 100 countries.
• Relocated its headquarters to Seattle's Union Station in 2011, signaling a commitment to its new tech focus.

They also adopted a trend that became popular in tech during the 2010s: Instead of focusing on one-time purchases, Getty began to focus on gaining monthly paid subscribers. Power users would pay a monthly fee to access a set number of images and graphics, giving the company recurring revenue.

Overall, the playbook was about product innovation and global expansion, turning Getty into "the premier, digital global marketplace for commercial visual content," as the company called itself.

Results

H&F's stewardship paid off handsomely.

By 2012, Getty had solidified its dominance, boasting growth in leadership and innovation that "revolutionized the industry."

Financially, the firm executed a $379 million dividend recapitalization in March 2012, bumping leverage to 4.3x EBITDA from 3.5x. This move returned capital to investors while keeping the balance sheet manageable.

The ultimate win: In August 2012, H&F sold Getty to The Carlyle Group and management for $3.3 billion, generating a strong return on their initial $2.4 billion investment (with H&F's equity stake yielding outsized gains).

Lessons

• For small-scale buyers, this highlights the power of bolt-on acquisitions and tech integrations to scale without massive capex.
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• Build subscription-like revenue if possible. I've seen many HVAC companies do this by offering a monthly or quarterly maintenance packages, turning one-off customers into recurring revenue.
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• Even in a terrible economy, there are great deals out there. This deal happened at precisely one of the worst times to buy a company. But the opportunity was still good despite the impending recession, and investors did well.

🔑 Roll-ups, Horizontal HoldCos, and SMB acquisitions

Can a non-accountant buy an accounting firm?

Yes.

I talked to one and learned how he grew the business 10% in the first year.

Meet Dave Gilbert, a holding company operator who bought two different businesses over two years with his partner.

First, they bought the accounting business for $2.8 million.

Dave faced two main challenges:

1. Legal challenges of owning and operating an accounting firm as a non-accountant
2. Operating a business he wasn't an expert in - and keeping all the clients happy.

. Despite all the chaos that comes in the first year of buying a business, Dave and his partner managed to grow the business by 10%.

I sat down with Dave and asked him to walk us through his deals, how he runs the businesses, and how he managed to grow in that tough first year.

​Watch on YouTube​

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Have a great day,

Sieva

P.S. - Are you hiring? Get started with top global talent from Somewhere (I'm a customer and investor)

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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