ICON66 – Volume 5
Forvus
Sold To RM
Plc
Government
IT Sector –
Data Management
Forvus is a leading supplier of statistical and data management services to the government sector with a turnover of £3m. The company was founded in 1985 and has a wealth of experience in data management, dissemination, statistical analysis and web based information systems. Major clients include The Teachers Training Agency and The Department of Education and Skills.
ICON Seminar
Having met at a seminar ICON ran in London in conjunction with Intellect, the three founding shareholders of Forvus engaged ICON to sell their company. After several meetings with the management team to understand the business and prepare forecasts, we drafted the main marketing document – a 20 page Sales Information Memorandum to highlight the strengths of the business and set out the financial details.
Cash is king
We researched the market and contacted 60 potential purchasers, half of whom were overseas companies. After a good response and having received signed confidentiality agreements, we met with 6 of the companies which gave management a good feel for alternative purchasers. We then ran a competitive bid process and received several offers that were substantially cash but had different deferred payment structures. Having given each purchaser a chance to revise their bids, the management chose RM Group Plc as the preferred buyer and we signed a 10 week exclusivity agreement which allowed them to conduct their due diligence and complete the deal.
Highest isn’t necessarily best
Choosing the right bidder from a competitive process is not always easy. RM made a competitive bid but was not actually offering the highest amount on completion. They were chosen for a combination of reasons, including the cultural fit, our assessment as to whether they could deliver the deal promised, its hands off policy, its financial strength and its reputation in the Education sector. As Tim Pearson CEO of RM Plc said: “The acquisition of Forvus is part of our strategy of moving RM into the broader education services market, and their expertise will be significant in broadening RM's education proposition. There is increasing recognition of the need to use data to underpin improvements in the delivery of public services and the skills Forvus brings to the Group, position us well for deeper engagement with our customer base”.
Keeping others warm
Nevertheless, we kept the under-bidders warm in case there were problems during due diligence. Fortunately all the issues raised during due diligence were resolved including for example a renegotiation of a lease on the Head Office, a restructuring of the deal as a result of a taxation change and obtaining release of Change of Control clauses in contracts from clients.
The deal
The deal took 6 months from start to finish. A pre completion bonus was paid to staff and £4.5m cash was paid to shareholders plus the opportunity to earn a further £2.5m during the next three years.
Corporate
Finance advisers
ICON Corporate
Finance
Vendor’s
legal and taxation
advisers
Stevens & Bolton,
Guildford
“ We
were delighted
with the job
ICON did. Both
in identifying
strategic buyers
and managing
a competitive
bidding process.
It was invaluable
in extracting
the best deal
for both shareholders
and the employees”
Upi Patel,
Managing Director
of Forvus
