Business
- A series of different business corporate entities covering Audit, Corporate secretarial and tax and bookkeeping services
- The practitioner, suffering from bad health, needed a quick sale
- 12 staff and revenue of SG$2mm
Background
The practitioner, who was unfortunately suffering from a sudden and serious illness, was looking to sell the business and then provide consulting services on a reducing time basis
Concerns
The main worries centred around the ongoing worth of the business
- Lack of an understanding of what the business was worth – especially without the Practitioner’s medium-/longer-term involvement
- Requirement that staff and clients continued to be looked after in a similar way/ethos
- 3 years left on the lease, requiring the property to be taken on as part of the deal
Actions
Foulger Underwood spent a number of hours with the practitioner to understand the business, the type of clients, professional referral network and staffing requirements. From this, a one-page teaser for the business was created as well as a fuller IM pack outlining the strengths of the business, the clients and the opportunities for growth going forward.
A selection of sector-specific clients were already known to Foulger Underwood, but the team identified Singapore-based CPA firms that would be interested in adding these types of clients to their overall portfolio.
The one-page anonymous teaser was then distributed to these parties and Foulger Underwood attended meetings with these firms to verify their suitability. In addition, Foulger Underwood identified two Big 4 partners who were looking to set up their own firm.
After numerous discussions, Foulger Underwood narrowed down the most appropriate firms to a selection of five and set up initial meetings with the client under NDAs.
Outcome
The acquisition was successfully completed by the now ex-big-4 partners, setting up on their own.
Foulger Underwood was successful in negotiating a multiple of 1.4 times the Audit fees and 4.5 times the pre-tax profit of the rest of the business revenues for the purchase of the business.
The practitioner stayed on as a full-time consultant for three months, then reducing to part-time over the next six months. The vendor, on top of his consideration payments, kept the majority of his cash at back and all his accounts receivable. All staff remained and to date, the client loss has been limited to only 5%.
Benefits
- The practitioner was made aware of additional Singapore firms with a specialist book of clients in the same sector as his group of sector-specific clients
- The vendor would never have been able to find the 2 Big-4 partners through his own network
- The practitioner avoided having to sell his firm on the open market and having to talk more openly on this sale
- Foulger Underwood, while acting on behalf of the vendor, managed to assist both sides by guiding them through the process and structuring a deal that suited both parties
