What was the deal?

It was the MBO of eQuality Solutions (eQS), an equality, diversity and inclusivity consultancy and technology specialist. It involved the simultaneous acquisition of three entities owned by eQS founder Chris Quickfall, and of Amano Technologies, which provides learning support for students and apprentices with learning difficulties or disabilities. The deal was funded by a £20m debt raise from London-based Shard Credit Partners.

What were the timescales?

We started work on the deal in summer 2020 and completed just before Christmas. That was super-quick, given the complexity of a buy-out, a debt raise and an acquisition being completed simultaneously, as well as the circumstances we all faced in December 2020.

How were you introduced to the deal?

I’d known Michael Hall, eQS CFO, for around 10 years. He’s been FD at several businesses – most recently, Maxim Facilities Management, which I advised on an equity raise and acquisition. Quickfall had grown eQS and had recruited a capable management team including Hall, but wanted to take capital value off the table, to allow him to focus on other business interests. Various options were discussed. I asked the right questions of the founder and management, then presented the option that achieved their objectives.

Who were the other advisers? 

From RGCF, there was corporate finance director Rhiannon Nightingale and corporate finance executive Ben Kain. We also provided strategic tax advice, and carried out financial and tax due diligence on the acquisition of Amano Technologies.

The legal advisers to management were Ward Hadaway. Gateley gave legal advice to Shard Credit Partners, and RMT provided it with financial and tax due diligence.

Quickfall took legal advice from Square One Law and tax advice from EY. Amano Technologies was advised by Condy Mathias and had legal advice from GA Solicitors.

How was the deal structured?

Management acquired 75% of eQS and Quickfall retained 25%. Shard Credit Partners funded the buy-out and provided capital for the buy-and-build strategy. Several funding sources were considered. Around two dozen private equity and debt fund providers tabled term sheets.

What were the challenges?

The biggest was the complexity of the deal. The three entities of eQS had been acquired separately. We also had to manage extraction of property interests, and the trade and assets of Cognassist, another eQS division, which Quickfall retained. Managing the different due diligence streams was also a significant task.

Were there any lessons learned?

In an MBO, it’s essential that management has a clear vision of the business post-completion. It needs to secure funding for the MBO and to support future growth plans. For eQS, it meant that the buy-and-build strategy could be implemented immediately. Since the MBO, we’ve advised eQS on four acquisitions.

It’s important to make sure a business is transaction-ready. The property disposal could have been dealt with sooner, which would have made a challenging project a bit less complicated. The deal highlighted the increasing availability of debt funding for MBOs. It might be more suitable for management teams who would prefer to own 100% of the equity in the business they’re acquiring rather than bringing in a private equity investor.

Carl Swansbury is a partner and head of corporate finance at Ryecroft Glenton Corporate Finance (RGCF). He trained as an ACA with PwC. In 2007, he joined RSM Tenon as a corporate financier, then joined Newcastle-based Ryecroft Glenton in 2011 to establish its corporate finance division, which now has a team of 22.

RGCF is a member of the Corporate Finance Faculty.

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