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Case Studies


Eddie Harding
Sector: Software

Business Sale:

Practique SOLD TO Merced Systems Inc

View Deal >>

The Objective

It's one thing to sell a business when you are ready to cash in and move on. It's quite another to sell a business when you want to stay with it and help it continue to grow and achieve its greater potential. If you're selling you’re unlikely to be too bothered about who you sell to, providing you secure the best possible price. If you're planning to stay however, you will need more from your acquirer. In this case, a shared culture, core goals and belief are key pre-requisites of a successful deal. 

The Vendor

Jo Walker and Steve Bowe spent 11 years building Practique from scratch, eventually becoming the European market leader for enterprise Incentive Compensation Management (ICM) software. Their product automates the increasingly complex job of calculating commission and bonus packages for organisations with large, performance driven sales teams, and its blue-chip client base included major banks and telecoms operators such as Royal Bank of Scotland, Orange and The Carphone Warehouse. In taking the company forward, however, Jo and Steve felt they were approaching the edge of their comfort zone. Far from wanting to take the money and run, they were ideally looking for a “friendly” strategic acquirer that would help take the company’s product, INCA, to the next level (i.e. global) whilst also taking on some of the increasing pressure of managing a fast-expanding business.  

Valuation Expectations

From the outset, Jo and Steve knew there was a strong inherent value to the business they had created but they were keen to understand what price a potential acquirer might place on the company. They were also keen to understand how they might extract value out of the longer-term potential of the business. During our initial discussions, ICON highlighted that a direct competitor looking to take Practique out of the market might only see value in potential cost cutting opportunities, the size of their existing customer base, and the obviously the benefit of removing a major competitor. However, Practique’s actual product might have little or no value to them. On the other hand, an acquirer from a complementary sector would value the company’s intellectual property, as well the prospect of cross-selling their products to Practique’s client and prospect base.

ICON's Role

Jo and Steve decided to appoint ICON because of its experience in selling technology companies within the global Tech M&A market.  As they wanted a friendly buyer for their company, we agreed not to approach close competitors in the first instance. Instead, ICON approached targets in complementary sectors, such as Customer Relationship Management (CRM) and Human Resource Software who would be looking to achieve cross-selling synergies and economies of scale.  We identified strong interest from major enterprises who wanted to acquire an offering in this relatively new and fast growing ICM sector. We also approached a number of companies already in the ICM space but without operations in Europe, and received interest from several parties based in the US and Canada who were looking to establish a foothold in Europe. What was really exciting was that as a result of this wider, international search we identified a preferred bidder who actually matched both these criteria. 

The Acquirer

After several months of contact with prospective targets and advanced discussions with interested parties we entered into negotiations with Merced Systems to agree terms. Merced Systems is a Silicon Valley based Sales Performance Software business that has established itself as a leader in the US market in the space of just five years, winning major accounts such as American Express, Citibank, Sprint and T-Mobile. They had also recently recruited a small UK team to identify new sales prospects and so saw the acquisition of Practique as an opportunity on three counts: namely to accelerate Merced’s expansion into Europe through the acquisition of a strong established team; to gain a highly complementary product offering to sell into its existing customer base; and the chance to fast track its own SPM suite to Practique’s client base.

The Deal

Creating a competitive environment during the sale process and identifying a strategic acquirer can have a significant impact on the success of a deal. Given the management team’s willingness to stay on with the business post-sale, we agreed to a mix of cash up-front, earn out, and equity, so potentially achieving a much higher valuation for the business.  By retaining an equity stake in the combined business, Jo and Steve have a vested interest in its long term performance and the opportunity to benefit from further upside in future. The benefit for Merced of deferring part of the consideration was to create a strong incentive for the management to meet their future targets and work for the good of the combined entity going forward. This helped to minimise risk for both parties and created a cracking deal for all.  

The Result

Jo and Steve have now achieved their ambition of going global.  


Jo Walker
Co-founder and Managing Director, Practique

"The acquisition process is daunting and at times, emotionally challenging.   ICON prepared us well.  Eddie Harding, was supportive throughout the entire process from construction of the memorandum of sale through due diligence and final negotiations.  This is a tough process and demands experienced and sympathetic support.  We found these qualities in ICON; guiding us professionally and personally through each stage of the process". Jo Walker, Co-founder & Managing Director, Practique


“ICON was recommended to us because of its track record in IT and its reputation for maximizing shareholder value. They used their key relationships with VCs and investors to help us raise £14.8 million from Japan, Israel, North America and the UK, and they went on to negotiate a superb deal for us.

I found them really great to work with - the chemistry was immediate and they were with us every inch of the way. They were always one step ahead of the VCs. These deals do not always run smoothly and you really need someone sharp sitting on your side of the table.”

Neil Lethby
Co-founder and CFO, OMD

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