Realising stakeholder objectives
Enabling private equity to exit its investment
Deloitte’s private equity and lead advisory teams successfully advised the private equity investor and management on the sale of a leading niche temporary staffing business to another private equity fund. The transaction enabled the private equity investor to exit its investment and found the right investor to support management in continuing to grow the business.
Deloitte invested significant time in pre-marketing activity prior to launching a sale process. This resulted in heightened interest in the asset, particularly in the UK and the US, resulting in a number of competitive pre-emptive proposals.
In 2010, the team advised the private equity investor on the management buy out of a temporary staffing business. Deloitte introduced the opportunity and following a competitive process was appointed to provide lead advisory, debt advisory, financial and commercial due diligence on their investment.
In 2011, Deloitte again worked alongside the private equity investor to help them acquire a complementary business and subsequently merge the two companies. This transformational deal enabled the combined business to become the market leader.
In 2013, Deloitte supported the private equity investor and management in a refinancing of the business, providing debt advisory services, and financial and commercial due diligence.
Deloitte approached a number of banks and helped the company build a syndicate, ensuring a robust and flexible source of capital for future funding requirements, whilst enabling a return to the shareholders of some of the inherent value in the business.
Sale of the business – stakeholder objectives
The private equity investor had invested in the original business in 2010, and was looking to realise that investment over approximately four years. Therefore, in late 2013, the team was considering how it might best exit the business.
Conversely, the management team, who also had a significant investment in the business, wanted to continue to participate in the business’ future growth.
Managing an effective process
Prior to a formal sales process being launched, the Deloitte team worked alongside senior management to build awareness of the asset and to heighten interest in a potential sale process in both the UK and US trade and private equity markets. The aims were to grow the pool of potential investors and also to build competitive tension.
The Deloitte team and management carefully refined the key selling messages and the growth strategy.
Together, these efforts resulted in a number of competitive proposals being made prior to a formal process being launched. One of these parties submitted a formal offer, post commencement of the sale process, and contracts were exchanged within two weeks of terms being agreed, and three days before first round bids in a wider process were due.
The private equity house successfully exited their investment, realising a significant return on capital (IRR and money multiple).
The management team were able to take a greater stake in the business and partner with a strong private equity investor, excited by the future growth prospects of the business.
Deloitte continues to work with the business to support it in realising its potential.