A large scale Events Management company approached ibv as they were looking to expand their service offering and were seeking advice on how best to achieve this and integrate into their already successful operations. After much discussion it was thought that a move into the Wedding Events sector would fit very well with their existing operations.
As a quick positive impact was sought, it was agreed that sector entry by way of acquisition was the best route to take. In addition, the company were keen to not only provide wedding event management, but to also provide unique structures and other physical assets that would help secure market positioning as a one stop shop and provide many upsell opportunities.
Following research, a suitable target business was identified, and discussions commenced. There was a willing seller who wished to follow other opportunities however, the stumbling block was the difficulty in being able to value the fixed assets. This arose as the target business manufactured its own unique structures, and had historically not measured detailed costings of this, in addition asset financing was not available as no proof of commercial invoices and therefore purchase value was available, this was of course a cashflow concern for the buyer.
This called for a bespoke deal structure that would satisfy both the seller and the buyer, but would not significantly increase the risk factor of the combined future commercial wellbeing of the business. This was achieved by agreeing that the value of the assets, was held in their future usage. A deal structure was then developed based on agreed capacity, utilization projections, and a commercial replacement cost after seven years. This provided a theoretical valuation acceptable to both parties, and was to be paid on a deferred basis over five years along with payments for an ongoing consultancy role for the seller. The deal completed successfully.
This was a deal that highlighted that there is no “one deal fits all” basis for a business sale or acquisition. The experience of ibv in structuring a bespoke deal to suit the specific circumstances enabled the deal to proceed.