Strategic review and M&A process for digital transformation agency, HS2 Solutions, leading to investment from private equity firm Mountaingate Capital

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HS2 Solutions (HS2) is a full-service digital transformation agency offering a broad range of strategy, experience design, development, analytics, and marketing execution services to help clients address their digital priorities. HS2’s owners initially engaged Equiteq to conduct a valuation of the business and to review the universe of potential buyers / investors. Equiteq was subsequently hired as HS2’s exclusive financial advisor for the overall transaction process. HS2 ultimately received an investment from private equity firm Mountaingate Capital (Mountaingate).

The client’s situation

Since the company’s inception in 2003, HS2 has successfully grown into a world-class digital transformation agency with an impeccable track record and long-tenured client relationships. Having experienced rapid historical growth, HS2 arrived at a point in its lifecycle where combining with a strategic buyer or partnering with a private equity firm would allow the business to more effectively capitalize on the significant and growing market opportunity.

We initially hired Equiteq to assess the value and market attractiveness of our business. Given their IT and marketing services industry focus and M&A advisory expertise, Equiteq was the logical choice to be our exclusive advisor for the overall process. Equiteq orchestrated a comprehensive and engaging transaction process, demonstrating a keen understanding of the buyer / investor landscape and providing us with sound advice every step of the way. The process led to a handful of transaction pathways to choose from, and Equiteq came through on their value promise and their commitment to delivering a successful transaction outcome.

Phil Hollyer CEO and Co-Founder, HS2

Our approach

Equiteq conducted a comprehensive strategic review workshop designed to assess the company’s enterprise value and to determine the overall buyer / investor demand for digital transformation agencies. Equiteq concluded that HS2 would be highly sought after by potential buyers / investors, and this insight provided the founders with the confidence they needed to proceed with running an M&A process. Equiteq provided expert guidance and financial advice to assist HS2 in finding the right partner to support the company’s next phase of growth.

Shareholder exit goals & deal rationale between buyer & seller

HS2 was seeking to find the right partner to help meet the expanding customer experience, technology, analytics, and digital marketing needs of its clients. HS2 chose to partner with Mountaingate given their extensive digital agency services investment experience and market savvy, attributes that will be instrumental in accelerating HS2’s growth.

Mountaingate, a leading middle-market private equity firm, focuses on investments in the marketing services space. Mountaingate was impressed with HS2’s outstanding strategic positioning at the intersection of technology, data, e-commerce, and marketing, as well as the company’s proven entrepreneurial executive team and its deep, tenured relationships with blue-chip clients. HS2 represented the ideal platform opportunity for Mountaingate to execute a buy-and-build strategy within the digital transformation space; the company is now poised to accelerate growth through both organic and acquisition-based initiatives with the assistance and capital support from an experienced equity investor.

How did Equiteq deliver value to the client?

• Based on our proprietary market insight and deep network of relationships, Equiteq developed a comprehensive list of over 70 potential buyers / investors that spanned multiple industry sub-sectors and included specific rationales for each party.

• Equiteq created a highly compelling positioning strategy, and effectively articulated HS2’s investment merits to the buyer/ investor universe.

• Given the strong and widespread market interest in HS2, Equiteq orchestrated an efficient and structured two-step process, enabling our client to focus efforts only on those buyers / investors who demonstrated a strong level of commitment to the opportunity and the process.

• Equiteq solicited multiple final proposals from credible domestic and international strategic buyers and private equity firms, providing the client with a variety of attractive transaction options and pathways.

• As a result of Equiteq’s successful positioning of HS2 and our management of a robust process, we delivered a highly attractive transaction outcome for the client at terms that exceeded expectations.


Read the press release on this deal here.

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