Equiteq helps market research firm move to next level of international development and create a favourable exit deal structure

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Our client, a top-quality market research firm headquartered in Singapore operates across Asia-Pacific with an international client base. Its international delivery model provides great flexibility and profitability, however, growth potential had plateaued. The founder decided to look for an international acquirer who would be a ‘good home’ for the firm and its team, offer international development potential, and provide both strong value realization and new professional perspectives. Following an Equity Growth Accelerator (EGA) workshop, Equiteq developed a high quality sales pitch, built a list of target acquirers and ultimately assisted our client in completing the merger with a publicly listed Japanese consulting firm.

This strategic move is a critical milestone in our history. Equiteq’s Singapore team rendered tremendously valuable support throughout the process, from the preparation phase to the closing of the deal. Without their astute and trusted advice, this deal could not have been completed.

Anonymous Founder, Main shareholder and CEO

The client's situation

This Market Research firm is highly reputable and operates across the Asia-Pacific Region. Its business model, leveraging a core team of high-level knowledge architects and project managers through a pool of local associates based in lower-cost Asian countries, was ensuring both flexibility and profitability. However, growth potential had plateaued, due to the evolution of the research industry towards IT-intensive processes, as opposed to more traditional approaches. 

Our approach

Equiteq ran an EGA Benchmark and developed a sales pitch leveraging our client’s unique strengths, making up for the context of slow growth.

A list of potential acquirers was built by Equiteq, targeting not only typical large players in the market research industry, but also mid-sized companies, consulting firms, and Japanese companies.

Equiteq acted as exclusive financial advisor to the market research firm staying deeply involved in each step of the transaction process, with close interaction with the client’s team, both internal and external, including participation in the execution of side agreements such as share buy-outs and retention/motivation agreements.

Shareholder exit goals & deal rationale between buyer & seller

Our client’s founder not only wanted to ensure continuity of development and success for employees, clients and stakeholders, but also required a deal that was not onerous in terms of retention and earn-out. He was also keen to play a top advisory role in the acquirer group post-acquisition.

For the Japanese acquirer, the acquisition provided access to large international accounts opening up the Western companies’ market. Post-deal, the Market Research firm’s brand has become the global brand for the acquirer’s organization outside of Japan.

How did Equiteq deliver value to the client?

  • After the EGA, Equiteq worked on developing a quality confidential Information Memorandum highlighting our client’s unique strengths in a market where traditional research firms are seen as sunset businesses.

  • Using its knowledge of the APAC market, Equiteq targeted Japanese buyers. Contrary to Western acquirers that were not keen on traditional market research, Japanese acquirers were taking a long-term view predicated on soft skills development and strategic transformation.

  • This approach meant that we could command multiples which were at least 20% more than market standards as well as a non-aggressive deal structure involving an 80% upfront payment, meeting our client’s objectives.

  • Equiteq supported the research company extensively throughout the entire process from discussions through to contractualization, despite significant cultural and language issues, the complicated international corporate structure of our client, and the unexpected resignation of the CFO.

  • Equiteq’s detailed approach made it possible to convince the acquirer’s team of the justification of the P&L restatements (initially challenged), and to alleviate their concerns about technically complex financial or consolidation issues.

  • Finally, Equiteq assisted the client in the buy-out of minority shareholders and the negotiation of retention payments for key managers, thus removing key obstacles on the way to the execution of the main deal.