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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Tactical support and project management of a deal

Our overseas client, who was highly versed in acquisitions and disposals, had identified a need for a bolt-on business in the UK to increase the geographic coverage of their existing company based in the North of England.

Whilst their own internal research had identified a number of targets, our own research and knowledge of the market added to this.

After an initial review, we were able to quickly draw up a shortlist of businesses to approach given the success criteria agreed and the scores applied to each company against those criteria. This gave us a clear priority list that the management agreed to.

From this, the internal team started to calculate potential offers and investment approvals while we conducted ‘on the ground’ face-to-face meetings with the potential sellers so we could assess the appetite to sell, key success factors and next steps.

We fed back results as we worked, but also consolidated these into a final report setting out all the businesses we approached and a revised priority list. The internal team used this to then agree their own priority list with their board.

Once the set of targets were approached, we then provided an independent project management role whereby we ensured that all parties were working to a common programme, that actions were progressed and key issues addressed in time.

We were also able to reduce ‘team tensions’ as our role was not advising on the deal or the financials.

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A revised mid-term business plan and list of key targets

Our client is a successful project management and operations business with a strong reputation in high risk and business critical environments.

Whilst they have been successful over the years, their core business remains heavily reliant on a limited core set of clients and services provided. This limitation can at times expose them, so they considered diversifying the services they provide to generate other income streams.

Given the scale of the business, an in-house led assessment would have distracted them from their core business, so we were asked to help run a number of workshops with the aim of assessing how they could enter new markets.

We worked with leadership team to assess their options, current strengths and opportunities and to clarify their key objectives. This resulted in a number of options given the strong management team that our client had, but over the course of several workshops we reached consensus.

From this point we carried out a market review that identified a number of companies our client could acquire, which in turn led to an intensive assessment of which companies offered a best fit.

The outcome was that we agreed a revised business plan based on the findings from our market review and the options this presented our client.

At the same time, a number of external factors affected our client, and as a result our initial plan has become a ‘watching brief’ on the market until our client feels the time is right to acquire.

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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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Off-market sale with key management retained

We were contacted by a group in a ‘distressed’ position who needed to move quickly and had concluded that a trade buyer was their best option given time pressures.

Our team quickly mobilised and undertook an initial review so that we understood the key operational issues affecting the business. We used our accountant to identify the main issues in the management accounts so we could verify this against our own findings.

From this we were able to identify what was required to rectify the problems facing the business, and then to assess which groups could address these and therefore carry out a successful purchase.

With our access to a range of senior executives, we quickly identified a group of potential buyers and arranged meetings under full confidentiality, enabling an off-market sale to take place. As a result, there was no negative impact on the operations, staff or clients.

In this way, our ability to undertake a business review and understand the potential buyers allowed us to ensure a smooth and successful sale.

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Quick off-market disposal

Our client had invested in a non-core services business that had only just broken even for a number of years, but that now required further shareholder funds to maintain adequate cash-flow.

After an initial meeting with our client, we were able to provide a quick assessment as it had reached the point when further capital would have to be invested into the business; it was important for our client to understand his options so he could determine the level of commitment he could make.

Our analysis revealed that for the business to meet expectations, the capital injection required was substantially greater than expected and that further investment would also be needed very quickly given the changes needed to turn the business around.

Given our client’s other business priorities, we agreed on the more radical but appropriate alternative of an exit strategy for our client.

By identifying the key value sections within the business, we were able to approach potential buyers for whom these areas represented significant value, which resulted in a quick sale that achieved our client’s objectives.

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Identification of over £500m of benefits

As part of a business acquisition, we undertook a review of the property assets and worked closely with the client acquisition team to assess both cost-saving initiatives and development gain.

Our client was buying a business that had a number of production sites in a range of locations (edge of town to rural). These sites were in varying conditions of upkeep and also needed to be able to meet modern manufacturing standards.

By working closely with the operations and the estates team, we were able to quickly identify which properties could be surplus, where best value could be achieved and also how surplus funds could be reinvested in a transformation programme.

We also assessed the wider market and were able, once we had outline options, to meet with local planners and development groups. This allowed us to identify local authority grants and also how our plans could release other benefits for local stakeholders in each of the sites we had prioritised.

Through our plan we were able to not only identify a significant surplus from disposing of non-core property, but by working closely with our client’s operational team, we also enabled re-investment in certain properties to create ‘best in class’ manufacturing sites.

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Submission of tender documents

Our client was undertaking a major M&A as well as bidding for a long-term service supply contract, with a total value of over £1bn.

At a key stage in the project a number of personnel wanted to leave, there was conflict in the team and senior leadership had lost faith in the direction the bid, and in particular the strategy the Bid Director was applying.

As a result of other work we have completed for our client, we were asked to take on the bid leadership and manage a team of technical experts who we seconded into the project to fill key gaps in knowledge and specialist aspects of the operations involved.

This ranged from expert input on environmental risks through to local development valuations, specialist MRO parts supply and IT integration. In terms of the tender production, we also provided bid leadership, bid writing, graphics and technical authoring.

We also convinced those who had considered leaving to remain, and were able to bring back key specialists who had left, but had been key to the bid.

In the very tight window of time that remained, we undertook a full analysis of the chance of success and aligned resources accordingly, and developed a clear theme for the solution.

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