Company
- European-based provider of administration and outsourced services for corporate entities on behalf of private clients
- The business was predominantly undertaking company incorporations, as well as the follow-on annual accounting and tax work for structures set up by family offices and private banks on behalf of their private clients
- Revenue of US$2.5mm
Background
A two-partner business, where one of the partners was looking to exit and the other partner looking for a new home and platform to develop the clients and service offering.
Concerns
The Partners had a series of questions, underlying their concerns:
- Would acquirers be interested in buying the majority – but not all – of the equity in the business?
- Which type of firms would be interested in buying the business and giving the remaining partner the freedom to continue to run and grow the business autonomously?
- How could the partners ensure this deal didn’t look to be a complete sale, in order to reassure the staff, introducers of business and clients?
Actions
Foulger Underwood sat with the client and understood the requirements of both shareholders, including the boundaries which needed to be considered from the outset, on what would be acceptable to them as part of the deal and what would not.
Having understood these parameters, Foulger Underwood contacted some of the most appropriate international trust and corporate service providers, enquiring whether this type of opportunity would be of interest to them.
The pool of potential parties was very quickly whittled down to two firms that were willing to accommodate the requests of the vendors and which understood the mix and make-up of the client’s business.
Foulger Underwood remained involved throughout the process, acting as the introducer, putting NDAs in place, arranging and attending meetings between the firms and negotiating on behalf of the client.
When an agreed terms sheet was in place for both potential parties, the client took four days to discuss the situation and came back with a preferred party with whom the Partners wanted to move forward.
During the due diligence process, the acquirer withdrew as they felt the business had a reliance on one main introducer/family for business and they felt this was too high a risk in terms of eventually novating the client across retaining them.
Foulger Underwood then picked up the deal with the other original interested party, a new term sheet was signed and this quickly moved to SPA stage, where lawyers were instructed to carry the deal through to completion. In this case, Foulger Underwood handed over to the client who, by then, was happy to proceed with the advice of their lawyers for the completion phase.
Outcomes
Successful sale enabling the one partner to exit and the other to move to a 25% shareholding. The deal was paid out over two years at a multiple of 6-times EBITDA.
Benefits
- Foulger Underwood sourced the most appropriate two firms that were interested in this type of outsourced services/business
- In spite of a failed attempt with one party, Foulger Underwood was able to reintroduce the alternative purchaser without any detrimental effect to the overall negotiations
