Equiteq’s client is a fast-growing management consultancy business working in the UK financial services industry. They were seeking a transaction to enable succession in their management team and release value for major shareholders. Equiteq advised their client’s shareholders to find a synergistic financial investor who would provide the required investment whilst concurrently giving access to new financial services markets, including the US. Our client achieved a top-of-the-range EBITDA multiple of c10, with an attractive structure that met shareholders’ individual cash-out and re-investment goals. Equiteq ensured that the deal included a ‘performance ratchet’ to capture additional equity value if/when the company delivered or beat its financial projections.
The client's situation
Our client, a leading provider of management consultancy services to a key sub-sector of the UK financial services industry had an increasingly dominant market position, winning major mandates against the ‘Big Four’. They were growing explosively and exploring possibilities to develop a global footprint. Their founder and majority shareholder was seeking to reduce his commitment to business and ‘leave the city’ (a lifestyle choice). The founder was also seeking a transaction to enable succession in the management team without diluting the firm’s opportunities to build on their impressive platform.
Equiteq undertook a detailed strategic review to provide advice on options and recommended the sale of the company as the optimal strategic direction. Equiteq ran a parallel process with trade (strategic) buyers and financial investors which solicited substantial interest with over 25 indicative offers.
Equiteq focused their efforts on finding a synergistic financial investor – someone with an international network so that our client could access cross-selling opportunities (and in particular to get a platform for market entry to the lucrative US market).
Equiteq helped the company describe their plan for continued and immediate growth – a low-risk, realizable forecast to more than double consultant numbers and EBITDA over a short period – delivering attractive money multiples and ROI for investors.
Shareholder exit goals & deal rationale between buyer & seller
The transaction had to enable the exit of the founder (majority shareholder) and help in management succession. The deal also needed to de-risk other major shareholders whilst giving them a substantial stake in the business going forward.
How did Equiteq deliver value to the client?
- Leveraged Equiteq’s detailed insight into the financial services consulting sector, providing a compelling articulation of the company’s growth opportunities and creating strong competition between potential acquirers.
- Used proprietary modelling techniques to translate diverse (and complex) offers to simpler, comparable illustrations for each shareholder, making it much easier to prioritize areas for negotiation.
- Achieved top-of-the-range EBITDA multiple of c10, with an attractive structure that met shareholders’ individual cash-out and re-investment goals.
- Ensured that the deal included a ‘performance ratchet’ to capture additional equity value if/when the company delivered or beat its financial projections.
- Took advantage of Equiteq’s strong consulting heritage to programme manage the delivery of a complex transaction in demanding timeframes.