Profile: Virgin Interactive plc is the London-based software games publisher and distributor, with additional offices in France, Germany, Spain, Australia and selected Asian countries. The company was launched by Richard Branson under the Virgin masthead and became one of the predominant players in the European games universe. During 1994, Blockbuster Entertainment acquired the company from Virgin and it later became part of Viacom as a result of the Viacom/Blockbuster merger in 1996.

Goal/Requirement: During 1997, Viacom determined that Virgin Interactive was a non-core asset and sold Westwood Studios, its primary US asset, to Electronic Arts, leaving the European operations. Averil Capital was charged with assisting a US- and UK-based management team in acquiring the Company.

Strategy:
• Averil Capital successfully negotiated the acquisition of Virgin Interactive on behalf of the management team. The purchase price included significant concessions from Viacom including an infusion of capital, the payoff of selected debt and the renegotiation of the headquarters lease.

• The transaction was coupled with a strategic investment by Interplay Productions at the same time. As part of the three-way transaction, Interplay closed and/or merged its European operations with that of Virgin’s.

Results: Virgin Interactive was sold to Titus Interactive, headquartered in France, approximately 18 months following the management buyout at a substantial gain.