Our Client is a leading business services group in the MENA, and we were engaged by the client to develop a European presence.
The Client provides a wide array of business services, however we focused on acquiring standalone companies that were specialised within a particular service line. The individual companies would then be bolted on to create a full-service offering. We used a revenue filter in conjunction with other investment parameters such as geographical coverage, service offerings and shareholding structure to short list approximately 100 target firms. Once we completed this, we gauged initial interest with the target firms and created a further short list of 20 companies, of which we wished to acquire 3-4.
Thereafter we created valuations for the companies and sought to acquire companies at lower than market average EBITDA multiples. Salonica then negotiated with the interested targets, ensuring equitable covenants for both the targets and the Client. Our primary challenge was to ensure the deals remained commercially attractive for both parties, and this was done, by developing medium term covenants. This maintained the current management teams were locked in for a period of time to ensure the targets remained profitable, while developing an integration plan into the overseas group company of the Client.
Our Client was able to benefit from Multiple Arbitrage.