Successful off-market bolt-on acquisition

Our client is a UK national provider of Integrated Facilities Management (IFM) with a number of private and public sector clients, including ‘prestige’ properties and large complexes.

Having grown the business successfully from a soft-services background, our client appointed us to help them expand into technical services to complement their own operations in this sector, which they were growing organically.

Working closely with them we identified a number of potential businesses that could have enabled them to expand.

We carried out 1-1 meetings with key management from the shortlist of targets we had agreed, and from this we drew up a list of five potential companies to acquire.

The number-one choice was a medium-sized business that was owner-managed and located within 45 minutes of our client’s head office, thereby enabling the management to easily transfer.

After an initial meeting, our client agreed this was the best option for them and quickly proceeded to complete a purchase.

This both enabled immediate cost savings (office space, back office overheads) and successful integration of the technical services management team, who were vitally important to our client and their future plans.

The acquisition has also given our client an excellent platform from which to build their maintenance arm, as well as cross-selling opportunities for their other service lines.

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Successful off-market bolt-on acquisition

Our client is a substantial soft-services business that operates across the UK supporting a number of customers in both the private and public sectors.

The CEO appointed us as he wished to expand his business into a complementary sector but had no time to identify a shortlist of groups or to approach them and carry out an initial assessment.

With our access to detailed market research on the FM industry and the ability to confidentially approach key decision makers, we quickly identified a company that we felt suited the objectives of our client.

After arranging initial meetings and supporting the discussions, we were able to let the specialist advisers of our client and the vendor carry out the necessary due diligence activities and complete a purchase.

Our client is pleased with the results as it allowed him to carry out his day-to-day role as CEO of a large group and to complete an off-market purchase quickly, with no disruption to either his own or the vendor’s clients and staff.

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Successful bolt-on acquisition with no distraction to core business

Our client is a successful cleaning and soft services provider who operates nationally, but after a strategic review by the CFO it was clear that a large proportion of their income was derived from three key regions in the UK and two clients.

They were therefore seeking to grow, not in terms of service diversification, but in terms of clients and geography so they could reduce their exposure.

Their COO worked closely with the CFO and ourselves to identify likely options and we were retained to support them over a course of a number of months, so that they could remain focused on their core business whilst we met with and vetted potential acquisitions.

From an initial longlist we identified a shortlist of three companies whom the COO and CFO met on a 1-1 basis for initial discussions. This quickly became one company, as the fit was strong and our client could see ongoing roles for a number of the management team; this would also help them expand geographically.

The potential target also had complementary skills, which our client was keen to deploy within their own organisation.

As a result of our support, we enabled our client to continue delivering a highly successful services operation to their customers whilst we helped them to identify an acquisition that offered both new geographic coverage and complementary skills.

This allowed them to successfully balance their portfolio and reduce their exposure.

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Sale of a manned guarding business to a trade buyer

We were retained by our client, who had built his business over a period of 15 years, in order to work confidentially to sell his business.

Our client had created his business from scratch, originally undertaking guarding duties for groups he knew personally and then eventually winning contracts and successfully providing a range of guarding services to offices and shopping centres.

He had successfully grown his business whilst remaining a regional operation, and had no desire to expand outside the few counties in England within which he operated.

We were retained to sell has business as our client had reached a point where he now wished to exit the sector he was in and pursue other interests, but apart from advertising it openly on the market or to a wide range of buyers, he had no knowledge of to whom he might sell.

He appointed Morphose as he knew we were able to act confidentially and offer him frank advice on his options.

We worked with the vendor for nine months, with the result that we fully understood his reasons for selling and future objectives. This enabled us to find an appropriate buyer with whom he agreed a majority upfront deal, at the same time allowing our client to retain a paid role for at least two years.

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Sale of fire and security detection/monitoring business to a PE group

We were retained by our client, who had built his business over a period of 12 years, in order to discreetly sell his business.

From our initial meeting we established his key reasons for selling and agreed a short-term plan so that he could maximise his exit position and also remain engaged in the business for a defined period of time.

Through working with vendor for 12 months we maximised his exit by building his cash reserve and maximising business efficiencies, whilst ensuring the business was ready to be sold and that he could exit the group in a planned way, with no negative impact on the operations or a potential buyer.

This allowed us to put in place an outline Information Memorandum (IM) giving potential buyers sufficient key facts to determine their desire to take matters further and remain involved to complete a purchase.

After narrowing down a short list of over 100 target buyers, we enabled our client to negotiate in-depth with two parties (a trade buyer and a PE group), before finally reaching a deal with the PE group.

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Off-market acquisition and new geographic coverage acquired

Our client, the Managing Director of a successful professional services practice, approached us as he wanted to expand his business by acquiring a bolt-on complementary business and had a number of groups in mind.

However, he wanted to remain anonymous so that his plans could be tested discreetly and to ensure best value was obtained from the earliest stage of any purchase.

The practice was engaged in surveying, project management, design, safety and CDM advice across the UK and in a few regions overseas.

Before approaching the target groups, we undertook research on the sector to identify key growth areas and critical success factors. This allowed us to undertake direct meetings with the target groups where we identified their needs and key issues, which in turn allowed us to prioritise the groups for our client to meet.

This also allowed our client to remain focused on the core business in a highly demanding and competitive environment whilst we identified suitable businesses for our client to acquire.

The result was that a successful acquisition was carried out; the key partners in the acquired business also remained in place and have now become an integral part of our client’s team.

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Increased profit and cash generation within 18 months of appointment

Our client had been a successful technical installation and service business, but its profitability had decreased and growth had stagnated despite increased expenditure in sales and on marketing. Although the company had launched new sales materials and a refreshed website with detailed videos explaining their services, neither turnover nor profit had grown.

At the same time, profitability had actually decreased despite the fact that our client had many long-term contracts that on first assessment should have been profitable.

The owners had reached a point where they couldn’t improve the organisation and were considering selling the business whilst it was still profitable.

Through several meetings we identified a range of options for the business and the owners so they could agree which route to take. We then carried out a number of operational assessments on the business and from this we drew up an agreed ‘plan of action’, which allowed the owners to take forward the changes we recommended.

The end result has been that they increased profitability, enhanced cash generation and improved sales over the course of 18–24 months.

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