People Value is a well-performing Human Capital Management (HCM) business built on a solid technology platform, with quality recurring revenues all topped off by a strong management team.
The largest shareholder and founder, Mike Morgan, wished to retire, sell his business and sail the world. Although the business appeared to be “sale ready”, he recognised Polestar may be able to help him get it over the line. At the time, the full extent of our role in the process was perhaps unclear. As is the case with many deals, there were many unknowns.
“We certainly didn’t understand the full extent of the support that Polestar would provide when we set out – It is easy to believe that your business is ready for sale just because it is operating well, profitable and expanding”
– Mike Morgan, People Value
From the off Polestar presented the business in a manner that enabled buyers to see the intrinsic value behind the numbers through normalised accounting policies and an integrated forecast, additionally
In addition to the pure corporate finance skills, Polestar identified a number of problem areas and opportunities. We made practical suggestions to help make significant steps towards professionalising the business in areas such as operations, client services and, more recently, sales.
The initial preparation work proved invaluable. Without it, completion to timeframe would have been impossible. Time is the enemy in a transaction on multiple counts. Once you commence a transaction you want to build bidder confidence: the ability to pull off detailed information that agrees between multiple information sources very quickly is key.
Alongside deal-specific extraction of data sits the presentation game; you hire an adviser to attract investment or bidders. You would not want the picture in bidders’ minds to focus on out-of-date software or an overcrowded storeroom, so we analyse data to help us understand your business and identify what makes it special.
The earlier you engage with advisors the better. Advisors provide a fresh pair of eyes by helping develop more comprehensive management data, which bidders require, whilst applying commercial logic to identify where the real value lays in the business.
PV was not atypical, at least for a business at this stage of development. In this instance, we conservatively estimate that the value from these undeveloped aspects could easily double the present profit level within two years.
You never know when an unsolicited approach might yield an exceptional opportunity that you could convert more easily if you had the information readily to hand; we had a deal complete at the same time as People Value where our client was approached less than a month before hand – it does happen.
“We certainly didn’t understand the full extent of the support that Polestar would provide when we set out – It is easy to believe that your business is ready for sale just because it is operating well, profitable and expanding”
– Mike Morgan, People Value