Background Information
This case study relates to the sale of a technology business, and in particular, a well established IT support company. It demonstrates our expertise in the area of the sale of technology companies, and our effectiveness at achieving an excellent market price within a very short space of time whilst maintaining the confidentiality of the client company. Within 4 months, we were able to complete the sale of the business including the legal process and achieve a market price which was in excess of the asking price, and chosen from 4 other offers which were put in front of our client.
About the Client
The client Stephan Buys was the main shareholder in NSIS Systems LLP. His wife was a non executive minor shareholder, and the other Partner was Sian Banks, who wanted to stay on after an acquisition. The company is a mid sized IT support company based in Central London.
The business was started in 2006 by the original Partners and specialised in outsourced ICT functions within the SME sector. The help desk support personnel are based in the heart of Central London and support is available 24 hours a day, 7 days a week.
The services offered include disaster recovery, cloud solutions, as well as IT support, and hardware and software sales. The target SME size is between 10-50 personnel and the company prides itself for being a “one stop shop” for its clients. It provides a very personal approach where end users are familiar with the staff who normally carry out monthly on site visits. The business itself is largely run by staff and in addition, one of the Partners has a full time role in accounts, HR and purchasing. Stephan himself had gradually stepped out of the business and handed over his technical responsibilities to staff, who are capable of operating the service with minimal input from him.
The business suited an acquisition for a larger company looking for a Central London base, that was able to offer alternative products and services and to grow the business.
Client's Challenge
Stephan had decided to sell his (and his wife’s) shares in the business for various reasons. He had grown the business almost single handedly through personal connections and was a key part of the service. As the business grew, Stephan realised he had to slowly hand over the reigns to his technical team, who he had carefully nurtured. He had tried to place good staff into the business, so that it could be operated without him, but this strategy did not lead to any further growth. After such a long time in the industry, he decided to sell as he realised he had lost interest and the business needed leadership to grow. Sian still had an appetite to continue in the success of the business, and it was therefore key to find an acquirer that was prepared to invest and offer a larger infrastructure.
Stephan had tentatively tried to sell himself before but without any success. He was very concerned about confidentiality as he did not want to lose staff and clients. He had never sold a business before and wanted to find a specialist broker that knew the industry and the journey well and could literally hold his hand and guide him step by step through the whole process. He also wanted a good market price for his efforts.
Stephan contacted a few business transfer agents and other brokers and decided to go with ETSC for various reasons. Firstly, the process of signing up was all done electronically, so it was very convenient and pressure free. Secondly, he believed that we were able to undertake the task of selling his business professionally and discretely. Thirdly the fee structure was attractive as there was no up front fee and a competitive commission rate on sale.
ETSC offer a very specialised service within the technology business sales environment and a very personalised service designed to make the process as painless and smooth as possible whilst achieving the best outcome.
Solution
We have expertise in the field of technology business sales with our Founder and Director Wanda Marginean having been in the technology industry for over 15 years and having worked for many large corporations and been involved in acquisitions. This allied with over 20 years experience of negotiating business deals offered by Zach Dogar, enabled a very smooth transition.
We approached the challenge by initially ensuring we had all documents available before we went to market, and had undertaken much of the due diligence on the business early on. In our experience, if you are not fully prepared then a sale can be delayed and any potential issues that may hinder a sale are dealt with in advance. Our business questionnaire is designed to extract important and comprehensive details of the business including a SWOT analysis to help formulate an effective marketing strategy designed to maximise price. A comprehensive Information Memorandum was prepared, so that when an interested party did come along, the whole process would happen very swiftly and there would not be any delays, even when the file was handed over to solicitors.
We also had to agree a marketing memorandum to place on websites and to send to competitors which maintained confidentiality but at the same time was able to attract buyers.
We understood that this opportunity would attract an acquirer looking to expand into the luctrative Central London market or a hands on private Investor that could take the business to the next level. The business was discretely exposed via the Internet using our websites www.etsc.co.uk, www.ets-corporate.com, www.businessesforsale.com and www.daltonsbusiness.com.
Our market research team also approached appropriate companies and also exposed the opportunity to our associated global partners and various international mergers and acquisition platforms.
Once a party had expressed an interest, they were sent a very comprehensive Non Disclosure Agreement which protected the business’s client base and staff. This was sent to Stephan along with a background check on each Interested Party and then and only then was the identity of NSIS revealed.
This was then followed by an intial conference call with suitable companies, which was attended by ourselves and Stephan to answer any initial enquiries and see if there was any synergy moving forward.
From over 80 Interested Parties 5 face to face meetings were finally arranged which we attended with Stephan and 4 offers put forward. Because we had undertaken most of the due diligence at an earlier stage, most of the information was to hand to enable offers to be made.
When all offers had been gathered, Stephan and Sian had shown a preference to move forward with Sprint Group Holdings Ltd, a larger acquirer with a turnover in excess of £2 million. Their offer was however lower than others and we then negotiated a price with them which was agreed. Because of the amount of buyers, the sale price achieved was way in excess of the asking price. The matter concluded swiftly through to completion, again because a majority of the due diligence had been done up front. The whole process took 4 months from the time of instruction!
Results
Stephan was very pleased that a sale had taken place so quickly and seamlessly and that confidentiality had been maintained throughout. Having had 4 offers to consider, he was assured that he had achieved the best possible price for the business and Sian was very comfortable staying in the business with new acquirers.
Sprint Group Holdingd Ltd were also impressed with their dealings with ETSC. Group Director Matt Harper-Ward said “I was impressed with the professional and fair way negotiations were conducted and it helped create a win win situation for all.” They had made many acquisitions before, which was also a deciding factor when opting for them.
Watch the video interview with the Founder and Partner Stephan Buys:
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