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Case Studies

TCO

Brian Parker
Sector: Software

Business Sale:

TCO SOLD TO CACI International Inc

View Deal >>


Background

Almost every owner of a technology business dreams of selling their company to a US buyer for cash and being able to head off to the ski slopes straightaway. That was exactly what ICON achieved for the founding shareholder of TCO on the sale of the company to giant US information systems group CACI International.

Since 1999 TCO has specialised in developing software for the social care market. It provided vital support for local authorities from the delivery of care to the financial and business management functions. TCO was previously owned by the management team, including Kevin Sparks who remains Managing Director and the founder and ex-Chairman Stuart Beatty, who now skis a lot!


ICON’s role

ICON was appointed as advisor after an extensive beauty parade. Before approaching potential acquirers we spent considerable time grooming the business for sale and advising shareholders on a wide range of issues including: timing, valuation, preferred deal structures, documentation, branding, marketing and preparation for due diligence.

CACI Inc. is a publicly listed company on the NYSE with a market capitalisation of US $1.8bn and over 9,000 employees worldwide. Like many other large US technology players, it is cash rich and looking to acquire complimentary UK businesses to accelerate its overseas growth and to try and rebalance its business which is still dominated by US revenues.

Investor interest in UK software companies focused on the public sector was strong. There has been a string of M&A deals completed in the past year or so by the likes of Northgate Information Solutions, Civica, IBS, 2e2, Tribal, SunGard and of course CACI. And we continue to see good interest from UK and US buyers as the sector remains relatively buoyant.


Competitive Tension

We created competitive tension in the sale of TCO by generating interest from a number of US and UK buyers, but the cash terms and relatively simple structure offered by CACI was a significant attraction to the shareholders. Earn outs are an increasingly common component of technology deals but, if possible, are best avoided. Too often they don’t run their full course or pay out the maximum level anticipated. Also share consideration can be restrictive and withholding periods of 12-24 months are not uncommon. So, when evaluating a deal structure, you do need to be flexible but cash is still king.


Result

ICON delivered, we had strong interest from a number of buyers but the cash terms offered by CACI and its significant resource provided an ideal opportunity to accelerate TCO's future growth and provide an attractive exit for shareholders.

www.tcosoftware.com

VC Comment

"When I met DeepStream, it was clear that they not only had all the technical skills and knowledge to execute their plan, but also the passion & commitment to succeed."

Testimonial

“I cannot recommend highly enough that you make sure you have the right team of people behind you - ICON were outstanding. Without their dedication and market knowledge, this deal would not have happened."

Mark Crosier, CEO and Founder DeepStream Technologies Ltd

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