Retained to act for the two shareholders of the lead public relations consultancy group servicing an industry sector who wished to sell.
One of these shareholders was to retire and the other wished to continue as managing director. The business had a turnover of some £8million but was incurring losses. In addition there were strategic benefits of a sale to an international organisation which would enable the Group to retain its major clients in the long-term by facilitating a multinational service.
We advised the clients on a list of candidates for approach and advised and assisted in securing preliminary offers. Then following elimination of all but two final bidders, we advised on the selection of a preferred bidder, a major international advertising group. The terms agreed were based on a £15 million valuation including £5 million being on earn-out over a five-year period.
We supervised the entire sale process including dealing with due diligence issues as they arose and instructing and overseeing the work of the legal team appointed. Our work also included: -
(a) Preparing a spreadsheet-based financing model to assist in evaluating the offer and undertaking sensitivity analysis in respect of the earn out element of the consideration;
(b) Advising on valuation;
(c) Bringing in and co-ordinating the role of a tax consultant to ensure the tax efficiency of the transaction;
(d) Preparing and negotiating heads of agreement;
(e) Advising the shareholders on the implications of the transaction;
(f) Advising and assisting the managing director in negotiating terms for participation of other members of the senior management team through the formulation and implementation of a deferred share arrangement..
The maximum earn-out was successfully achieved within three years.
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