Over the past two years the Arkios team in the UK has completed transactions for clients across the globe, in a variety of industries, with deals coming in all shapes and sizes. What is consistent is our approach to understanding the objectives of our client, and then driving a process to meet these. Below are some recent examples of this.
This Scottish headquartered business had operations across the UK to service clients in the global aerospace industry. Combining their long track record, high levels of expertise, and targeting a niche area of the industry, they were beginning to expand operations significantly with new clients.
Although Arkios had known the CEO and 100% owner of the business for several years, they were looking to sell their business through a business brokerage, and had become very frustrated that the process had taken over 12 months with no success and a very reactive approach.
From our first detailed conversation it was clear that the CEO believed fully in the potential of the business, and would be keen to continue his involvement. Given the financial size, performance and transaction dynamic, we felt there was significant potential to introduce a small private equity firm that would purchase part of the CEO’s stake, allowing him to de-risk his position, while continuing his involvement in the business, and the financial upside. The private equity firm would be able to support the CEO, allowing him to focus further on the business.
Arkios designed a process to first analyse the business in detail, and then to suggest and approach a small number of appropriate partners for the business. Our analysis and preparation process took 5-6 weeks, and involved an in-depth look at all areas of the business.
Following initial meetings held between Arkios and potential investors (designed to provide a full understanding of the objectives for both parties), we began to introduce the CEO and his top management team to investors, with a select number of being ultimately invited to the view their sites and enter into more detailed due diligence.
Eventually expressions of interest were received from multiple parties, and our role became advising our client on the relative merits of each; the highest offer is not always the best depending on the circumstances!
An offer from a leading UK mid-market private equity firm was ultimately accepted, allowing the CEO to sell a large minority of his shareholding, and receive payments over the coming 18 months. Following acceptance, a due diligence period encompassing commercial, financial and legal aspects was initiated alongside the final negotiations for the formal legal documentation. Arkios played a key part in orchestrating this process which involved several external specialist firms.
Successful completion was reached, and the Company remains a close client of Arkios, and has since asked us to investigate potential acquisition targets.
When introduced to this client they had a 30 year history as a leader in multiple maritime industries from sub-sea engineering projects in Europe, the Middle East and Africa, to maritime security in the Indian Ocean.
Arkios was introduced to the management team of the business by a former client, as they were looking to effect a Management Buy-Out (MBO) of their business from a larger European parent company, believing that the business would be more effective as an independent and flexible organisation.
First step with the client was to formulate their operational strategy for the coming years, with a clear idea and communication of where they wanted to go, they would be more capable of obtaining the necessary financing. More importantly, this helped to highlight a number of the prescient factors that would impact the structure and terms of the exit from the parent.
With a clear idea of the optimal strategy, Arkios began negotiations with the Board and shareholders of the Parent Company; by letting Arkios handle negotiations a clear divide was provided for the operational management. Simultaneous to this, Arkios began to make contact with a number of potential financial supporters for the MBO.
Over a period of 3 months a structure was agreed, legals were finalised and an investor was sourced who would become part of the business going forwards. The transaction was completed shortly thereafter.
Given the strategic work we had done as part of the MBO, we were not surprised to be contacted a few short months later by the client asking us to investigate a number of potential transactions that would supplement their growth plans.
Arkios performed extensive due diligence on a number of target businesses, and with our working knowledge of our client we were able to relate everything to the context and fit of their business – covering the financial, commercial, strategic, operational and potential of integration plans and issues. One such acquisition was completed through internal cash.
Our next role with the Company was to analyse and negotiate an offer the management had received from a strategic investor. Again, knowing the various stakeholders and their objectives we were able to very quickly analyse and advise on the relative merits of the offer, and suggest negotiation points to improve the terms and structure (as well as the price!). In this instance we ended up negotiating a transaction that was significantly different from the original offer, but was more achievable and allowed the existing shareholders to transition out of the Company in a variety of ways depending on the future business performance.
Given the capital markets experience of the London Arkios team, and our International Network, over the past decade Arkios has built up considerable expertise in raising funds International funds for Listed Indian corporates, and are now considered a world-leader in the field.
Most recently, in the summer of 2014 Arkios was approached by an Indian client looking to raise capital outside of India. Arkios had previously raised funds for the business in 2013, and their rationale was that the local funding market in India remained tough for mid-market companies, however post-election (landslide victory for Modi), India was being seen in a very positive light by global investors, and the industry was also opening up appropriately to foreign investment.
The Singapore Stock Exchange was chosen as a Listing venue, with Foreign Currency (dollar denominated) Convertible Bonds as the appropriate attractive instrument, however Arkios has also provided similar advice for Luxembourg Stock Exchange Listings and Global Depositary Receipt instruments.
The role of Arkios was to orchestrate the entire process, from the Investors to the respective legal teams (over 5 teams in 4 continents), the Company, Depositary, Custodian, Stock Exchange and Regulator. This process was successfully completed in just over 3 months.