|Deal completed in:||9 Months|
A well-established IT consultancy providing clients with scalable, robust and easily extensible internet products, solutions, support, maintenance and testing services in the Digital, Web, On Line and Mobile arenas.
With a head office in Maidenhead, another in Manchester and a back office in Mumbai, the company had been established for 10 years and had an extremely loyal and varied client base including global and blue-chip companies and held master service agreements with some of the highest profile Systems Integrators in the market.
The privately-owned company was established in 2007 and offered valuable intellectual property, extensive experience and large growth potential.
The sales revenue for the financial year to 2017 was c. £4.68m with a gross profit of c.19%.
With a 10-year exit plan in mind the vendors believed they had taken the company as far as they could, and felt that the substantial growth potential of the business would be better realised by a larger organisation.
The vendors were looking for 100% sale of the share capital and both were flexible regarding a potential handover of the business and willing to accommodate any reasonable preferences of the acquirer.
The outlook for the company was exciting and positive and consisted of a strong experienced onsite team as well as 30+ subcontractors. With the market so buoyant, a sensible spread of clients, the ever-increasing volume of business and a well-oiled sales plan, the vendors believed the future owners could capitalise on these deliverables.
The sale of this company presented an excellent opportunity for a larger company in the same space and would provide further access to already valuable client relationships and a profitable and flexible project resource.
What Hornblower Did
We launched an extensive marketing campaign in May 2017 focusing on our established network of buyers in the IT and technology sectors. Within a few months we had received over 60 enquiries and our aim was then to identify the ‘right fit’ buyer, one possibly looking to add a consultancy division to drive turnover and profitability, also one that could offer the current owners potential opportunities to stay. By September 2017 we had found such a company, agreed heads of terms and by January the transaction was completed.
Mark Sykes, our International Mergers & Acquisitions Director, led the sale from initiation through to completion. Mark assessed the buyers’ suitability and funding arrangements, set up meetings between buyers and vendors, and negotiated final offers on our client’s behalf.
This was a challenging sales mandate as although it was a business with a significant turnover, as a consultancy business with only a few employees and all the work being carried out by contractors, the perception of risk in relation to sustainability was always going to concern some buyers. We established the realistic market value for the business, and by matching it against an acquirer with a good strategic fit, we were able to command the best deal value and sale structure for our client. A successful sale of 100% of the shares was agreed, as was a full handover process by the vendors.
SOLD – January 2018