Case study: Business Sale

Retained to act for the two shareholders of the lead public relations consultancy group servicing a specific industry sector.  The shareholders wished to sell their interests.  One of these shareholders was to retire and the other wished to continue as managing director.  The business had a turnover of some £8 million 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.

Advised the clients in respect of a list of candidates for approach and advised and assisted in securing preliminary offers.  Then following elimination of all but two final bidders, 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 through an earn-out over a five-year period.

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.  Work also included: -

• 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;

• Advising on valuation;

• Bringing in and co-ordinating the role of a tax consultant to ensure the tax efficiency of the transaction;

• Preparing and negotiating heads of agreement;

• Advising the shareholders on the implications of the transaction;

• Advising and assisting the managing director in negotiate 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.