What is the deal?
In September 2020, Microserve, a Bristol-based digital marketing agency, was sold (for an undisclosed sum) to Investis Digital, a London-based global digital communications company. Microserve is one of the UK’s largest accredited developers of the Drupal web content management framework. Microserve is comparatively small in turnover terms, with just over 20 employees. But for Investis, there is tremendous opportunity to offer services to existing clients, as well as tap into new clients. Investis has offices in New York, Frankfurt, Dublin, Helsinki and India.
How were you introduced to the deal?
In 2019, I ran a workshop at the annual Bristol Technology Festival. Matt Sharp, the founder shareholder of Microserve, attended the event on managing tech businesses through their funding and tax life cycle. After, I spent time getting to know the business and understanding shareholders’ objectives. In early 2020, Microserve was approached by Investis, which had a track record of making acquisitions to bolt on. We were in a great place to support the founder and management shareholders in the sale.
What were the timescales?
The approach came just before the March 2020 lockdown in the UK. Like many deals at the time, there was a delay. Microserve had to take time to transition people to working remotely. The issues were operational rather than deal-related: collaboration is key for a digital marketing agency and they had to ensure that was working. Then they had to prepare information for due diligence. So, there was uncertainty, some protracted negotiations, on the structure of the deal in particular, but once the final terms were agreed, we completed within a couple of weeks.
Who were the advisers?
I led the PKF Francis Clark corporate finance team, supported by our corporate tax partner, Stuart Rogers. On deals like this, having an integrated corporate finance and tax team is important. Alex Pyatt, from Temple Bright, provided legal advice to the vendor shareholders. Claire Price, group CFO and UK MD at Investis, led their in-house financial and commercial due diligence. They took legal advice from an Osborne Clarke team led by Jonathan Crowley.
How was the deal structured?
The transaction was a straight share disposal, with some consideration deferred. Part of the challenge was that Sharp was exiting the business, while CXO Dan McNamara was to have an ongoing role. We had to strike a balance between reward now and in the future.
What were the challenges?
Investis is a global ECI-backed business with a proven acquisition record and team to support M&A. Our client, while successful, had never been through the process. They were keen to explore the opportunity, but had to keep their focus on the business during a challenging trading period. My role was to bridge this gap, and manage negotiations between parties, expectations for both sides, and timescales.
Lessons learned?
I am very much a people person, and actually meeting people is key to the chemistry of getting a deal started and completed. With all the new virtual ways of doing things, good communication is more important than ever.
The CV
Nick Tippett is a director in the PKF Francis Clark corporate finance team. He is based in Bristol but covers the South West region. He joined Francis Clark in 2010 as a corporate finance senior associate, from Bishop Fleming, where he had qualified as an ACA. In 2017, he was awarded the Insider South West Young Dealmaker of the Year. He has a degree in business studies from the University of Swansea.
Recent deals
- Sale of Essa Technologies to Jenoptik AG for an undisclosed sum.
- Key Capital Partners £8.6m buy-out of Construction Materials Online.
- Sale of forecourt management business Chartman Retail to MRH.
About the article
This is extracted from the full article in the Corporate Financier December 2020 /January 2021 edition - exclusively for Corporate Finance Faculty & Faculties Online members - who can access our award winning magazine in its originally designed form, and our extensive archive brought to you by the ICAEW Corporate Finance Faculty
