Equiteq helps Australian business consulting firm with an APAC growth rationale to complete a merger within 4 months

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Award winning PMsquare, an Australian IBM Premier Business Partner, was established in Sydney in 2008 and expanded to Singapore, the US and the Philippines. PMsquare is a business consulting company specializing in financial and operational performance management (FOPM) and business analytics solutions. They wanted to grow and develop in the APAC region and so Equiteq undertook a strategic review, identifying options for growth. Equiteq helped PMsquare to be ‘investor ready’ by developing an information pack, which became a key success factor during discussions with one of PMsquare’s competitors, Cornerstone Performance Management. A formal discussion between both parties evolved the deal from a sale/buy deal to a merger. Equiteq managed the process, ensuring it was completed within a short timeframe. Cornerstone and PMsquare merged their Australian and Asian businesses; with the Australian business operating under the Cornerstone brand and the Asian region continuing to operate under PMsquare as part of the Cornerstone Group.

I am grateful to Equiteq for the valuable support their APAC team have provided throughout the process, from the preparation phase to the closing of the deal.

Carsten Brandt Founder, PMsquare

The client’s situation

PMsquare’s shareholders wanted to leverage their IBM knowledge and their Australian-Asian operations to reach another level of business development by focusing their energy on APAC growth through Singapore. After conducting a strategic review with Equiteq, a few options were on the table to reach a critical size. One of the options was to enter a formal discussion with a direct competitor in Australia following a friendly unsolicited approach.

Our approach

While the approach from a potential merger could be quiteflattering, and regarded as good news for the shareholders, the risk of management distraction and the sensitivity of the disclosure of key information required the situation to be handled with care. Before entering a formal discussion, Equiteq helped its client to be “investor ready” by preparing an information pack including a 3-year business plan and a review of potential synergies.

This information pack was a key factor in the success of the due diligence and negotiation. On top of the “technical issues”, Equiteq’s role was to discuss every sensitive aspect relating to the deal between the persons involved, new compensation packages, reporting lines and the definition of roles and responsibilities. This was vital to the protection of the quality of the operational relationships between future colleagues.

Shareholder exit goals & deal rationale between buyer & seller

Both organizations are IBM Premier Business Partners with a focus on the business analytics solution set. However, the primary geographical focus of PMsquare is in Singapore and the Philippines, whereas Cornerstone has traditionally been focussed on the Australian market.

After having successfully launched and developed PMsquare’s IBM service offering, with high penetration in the health sector, the founder opened an office with his business partner in Singapore to develop the Asian market activity. The founders wanted to pivot their attention to Asia after seeing the growth potential of the market. To support their initiative and back their Australian operation the founders recognized they needed to find a strategic partner.

It was the perfect timing for Cornerstone, as they were beginning to create a business in Singapore and could create synergies from the merger of the existing businesses in Australia.

How did Equiteq deliver value to the client?

• Equiteq’s model of “Local presence and global reach” has been highly leverageable in APAC, with this deal being a prime example. The deal was managed in Australia between two Australian parties, and since part of the rationale was the Singaporean operation, the Equiteq APAC team based in Singapore provided deal support and covered some of the local specificity.

• The timing and speed of the deal was a critical part of its success. The fact that the two parties were competitors who knew each other well meant it was important to create momentum to ensure the deal was completed. As a result, the deal was completed within four months.

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