Business Sale With Private Equity Investors

Following a BIMBO with Private Equity funding, and having subsequently built up the business by way of acquisition and organic growth to become a substantial operator in the Logistics and supply chain sector with a turnover in excess of £40M, it was decided that the time was right for shareholders to realise the profit of their investments.  The shareholders were made up of Private Equity investors and the senior management.

Following extensive discussions, it was felt that best value would be achieved by selling the company to a trade buyer.  Through contacts within the sector prospective purchasers were identified and ultimately a suitable potential purchaser was identified. The Seller had a number of contracts involving supply chain solutions to the Automotive Sector which was attractive to the potential purchaser.

Having completed a number of acquisitions as part of their own growth strategy the business was well prepared to ensure the relevant information was made available to the purchaser in a format that would help smooth the process. Once the decision to sell had been taken a timetable and action plan were put together which was realistic and workable without having a negative impact on the day-to-day business.

Prior to marketing the business there were a number of key issues that were addressed to present the business in the best possible light: -

From the information supplied the potential purchaser was able to make an indicative offer, this was discussed in detail with management and subsequently revised based on clarification of some of the precise customer contractual terms.

As with many companies the exiting shareholders had different circumstances in relation to how payments were best made to them to provide a tax efficient sale of their shares. These differing priorities were reviewed and specific tax advice taken by each shareholder, once the best option for each shareholder was established a discussion and negotiation was held with the purchaser as to how these individual objectives may be achieved within the relevant tax frameworks.

With all the above negotiated and agreed, a specific completion timetable was set and kept pressure on all parties involved to ensure that it was adhered to. This was successfully achieved and the deal completed to both the Vendors and Purchasers satisfaction.

Following completion of the deal, certain directors remained with the business for a handover period of six months as requested by the purchaser. The deal contained an earn out clause based on future performance over the following twelve months and all targets were met. It is essential when agreeing a sale incorporating an earn out that the targets to achieve further payments are reasonable and achievable.