Description
Polestar advises EVORA Global on securing institutional growth investment
Polestar has provided ad-hoc advice to EVORA Global, a specialist ESG consultant and software provider to the biggest names in global real estate asset managers for many years and worked with the team as they grew into this fast-expanding sector. It was agreed by the shareholders in 2019 that, when the business hit various milestones, the time would be right to seek an external shareholder and deliver a full or partial exit alongside investment into the business. EVORA doubled in size in both 2020 and 2021, and it its milestones were bang on target. After a short beauty parade, EVORA’s shareholders appointed Polestar in the summer of 2021 to affect a transaction whereby a partner would be chosen based on it ability to fortify EVORA’s position as a market leader. Also key was the need to strengthen the firm’s infrastructure to meet the sustainability sector’s burgeoning market opportunity and, importantly, develop its software, SIERA, to become the preeminent solution for property asset managers.
Preparing the business for sale
Charles Whelan, Partner and lead on the transaction, along with Richard Hall, Partner, and Joe Graham, supporting Analyst, conducted a full review of the businesses and produced an information memorandum (IM) while simultaneously guiding both the managing and recently installed Finance Directors through the production of a comprehensive five-year forecast.
Production of the IM had its challenges, given that the accounting systems had struggled to keep up with the Company’s growth. Polestar introduced a Finance Director, Stephen Badger, who, through his previous corporate finance expertise, was able pull together the minimum information required. The lack of internal visibility restricted the information available to only what could be collected manually. At this time, Polestar also advised management to conduct both legal and financial vendor due diligence to streamline the sharing of mission-critical information across the wide range of potential acquirors.
Approach and Selection of Investors
Given the ongoing levels of demand for Evora’s services, Polestar’s main goal was to keep EVORA’s management focused on the business and, where possible, away from the transaction process. This would allow internal efforts to be focused on key client delivery and financial and development goals – which would be critical in achieving a headline valuation deserving of an industry leader.
Following the 2021 Christmas break, Polestar approached 98 pre-selected domestic and international parties generating significant interest from both trade and Private Equity (PE), who management felt would share the same goals and purpose. 39 parties were extremely keen and, having received IMs, Polestar was, as expected, inundated by requests to meet management to ask detailed questions and for demonstrations of the Company’s impressive software. Polestar met at least once with each interested party and up to five times with some.
These requests would have overwhelmed the management team and it was all hands on deck at Polestar where we had five members of the team working on the transaction. We built a 25-page supplementary pack that answered all the interested parties’ questions and arranged an anonymous live software demonstration webinar and Q&A event for all interested parties, attended by 109 participants, circulating the recording to half a dozen more.
39 parties in the first round were thinned down to 16 expressions of interest from several of the headline names in the consulting, property management and investment ecosystems. The list was further refined down to nine bidders, including US, UK and European private equity alongside both domestic and international trade buyers. Six investors were then shortlisted for management presentations, with each evaluated on five key criteria:
- Focus on ESG and social impact
- Vison alignment
- Cultural fit with EVORA
- Understanding of technology
- Ability to scale EVORA
The six were narrowed down to four following the management presentations, bidder dinners and overseas visits. We received four very strong offers, and these were narrowed down to two bids:
- A trade party who was extremely keen to bring EVORA into its business in a manner by which the EVORA brand would become their market-facing persona and the software would be delivered by a specialist tech team
- A consortium lead by Bridges Fund Management – which management believed best aligned with their vision – combined with MSCI, one of the last six bidders. During the final selection, Bridges brought in Farview, a specialist software PE firm, to bring increased strength and depth to its bid. The combination of the impact investor, a specialist tech firm and a market-leading data business made for a formidable team.
Following the selection of the final two, management held discussions with each party, allowing each to develop their investment thesis and submit their final offers. It was a close-run choice. The trade deal would have given more certainly, but there was more future upside with the PE deal. Furthermore, it was felt that Bridges had the independence that would enable the business to meet its vision and deliver on its purpose.
Head of terms, due diligence and completion of “the most complex deal any party had ever worked on”
Both the size and complexity of the business, alongside the private equity/trade consortium, created a highly complex deal from the beginning of exclusivity all the way through to completion. A couple key areas that required considerable effort to resolve included:
- Multi-level service and commercial arrangements were required, in addition to usual deal structuring and investment agreements to cover all the needs of the consortium of investors
- Providing the differing information requests and areas of key focus of each party
- Cultural sensitivities when dealing across jurisdictions and time zones
- The tax treatment of multi-jurisdictional employee securities requiring liaison with specialists and barrister opinion
Polestar negotiated an attractive structure that will enable the management team to benefit as the business grows. Finally, as the deal approached completion, the last challenge was informing all 36 shareholders in the business of their day-one consideration and both their ongoing consideration and terms. Opting again for a Polestar-hosted webinar, supported by EVORA’s legal counsel, all relevant matters were discussed while offering the opportunity for confidential Q&A.
The deal closed on the 7th of October 2022 for an undisclosed amount. Polestar acted as the sole corporate finance advisor to EVORA Global.
About EVORA Global
EVORA Global a specialist ESG consultant to some of the biggest names in global real estate, including Invesco Real Estate, Hines and M&G. The company provides consultancy services and has developed its own software, SIERA, which enables its clients to make investment decisions regarding climate change and sustainability. Founded in 2011 by Chris Bennett, Ed Gabbitas and Paul Sutcliffe; the company doubled in size in both 2021 and 2022 growing to over 200 staff at the time of completion.
About Bridges Fund Management
Bridges Fund Management is a specialist sustainable and impact investor. Through its Sustainable Growth Funds, Bridges invests in growth companies that are supporting the transition to a more inclusive and sustainable economy. By helping these businesses to scale and achieve their potential, Bridges is able to deliver attractive financial returns alongside measurable social and environmental impact.
Bridges is committed to being a global leader in sustainable and impact investing. It is a ‘best for the world’ B Corp, with an overall score in the top 1.5% of all B Corps globally, and received the highest possible rating of A+ from the Principles for Responsible Investment in all three of its eligible categories (Private Equity, Strategy & Governance).
About MSCI Inc.
MSCI is a leading provider of critical-decision-support tools and services for the global investment community. With over 50 years of expertise in research, data, and technology, it powers better investment decisions by enabling clients to understand and analyse key drivers of risk and return and confidently build more effective portfolios. It creates industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.
About Farview Equity Partners
Farview Equity Partners specialises in investing in growth-oriented enterprise technology companies in Europe. Founded in 2019, Farview’s mission is to empower European enterprise and financial technology companies to grow beyond their current horizons. Farview invests exclusively in SaaS; technology-enabled information and business services; and financial technology companies. The firm makes both minority and control investments that range from €15 to €50 million. In addition to capital, Farview provides targeted support to its portfolio companies, leveraging its deep network, extensive resources and pattern recognition of past successes to help drive differentiated outcomes.