|Deal completed in:||4 months|
A well run IT support company with a team of 5 staff providing IT solutions and support to small businesses in the W1 postcode of central London. Established in 2003, the company had a turnover of £460k, with net profit of over £95k. Circa 50% of the revenue was generated from contracts for their IT support service.
The business was run by its two directors who each had 50% shareholding in the company. One director was focused on operations and financial control, the other was in charge of marketing and business development. This worked well for the first seven years; but then there came a dispute. With the general discussion in the IT industry in 2010 around Cloud computing being set to become mainstream, the two directors disagreed fundamentally over the future strategy of the business. There were also underlying tensions between the two directors over who was actually running the business day to day. As a result of these tensions in the office, all 5 staff handed in their notice within one month early 2011.
Despite this, the directors managed to maintain customer service through hiring contractors and handling the technical helpdesk themselves. However they decided that the best solution would be to sell the business and so enable them to go their separate ways. Action was required quickly before the business fell over due to lack of technical resource.
What Hornblower did
All the information required to market the business was prepared within one week. Within the next four weeks, we had received 60 enquiries and received 12 offers of which there were 3 clear front runners to choose from.
Whilst we addressed the issues around staffing with the prospective buyers, we were able to demonstrate the strength of the client base and the systems/processes that were in place to run the business and therefore the true bottom line profit that a trade buyer with spare capacity to serve more clients could achieve. Indeed a number of buyers saw the sellers’ problems with staffing as an opportunity.
We were able to achieve full value for our clients and the deal was completed within 4 months of our being instructed. The buyers acquired a solid set of contracted clients which they are able to support from their existing operations and increased their revenue by 50%.
SOLD – October 2011