Yellow Pages are red hot in private-equity business
I remember going to the annual Yellow Pages conference in early 2001 in Jacksonville, Florida and being blown away by the size and potential of the yellow pages industry. According to this Wall Street Journal story (subscription required):
Much of the talk in the private-equity business, particularly among buyout firms, is what will become of the recent "hot" property: the stodgy old phone books that are a staple of telephone tables in parlors across the country. After a wave of yellow-pages buyouts, it's become clear that they exemplify the new measured approach to private-equity investing.
"If you went back a couple of years ago, people were looking for the next great thing with explosive growth," said Stewart Kohl, co-managing general partner at private equity firm Riverside Co. "I think what you're seeing now is the inverse of that. People want stable, predictable growth."
...Private equity firms were attracted to the yellow pages businesses for their high margins and low capital requirements. "These are very well-run businesses," Mr. Comack [a telecommunications analyst with Guzman & Co.] said. "They have margins somewhere in the mid- to high-50s. And they have very steady cash flow."