Description
About the business
GPW Group Limited, an independently owned risk consultancy with offices in London, Dubai and Singapore, was bought by JS Held, a PE backed US consultancy practice. GPW was introduced to Polestar by the brother of an existing client (now, Chancellor of the Exchequer!)
When examining the business, Polestar identified the key valuation drivers, built around GPW’s unique market knowledge, the management team, strong service offering and diverse client base. GPW’s management is ranked by Chambers, Who’s Who Legal and other industry publications as leading subject-matter experts. Its strong service offering was adaptable to many different types of clients, such as financial institutions, investment firms, etc.
The three main shareholders appointed Polestar on the mandate to:
- Find a like-minded strategic partner to take the business to its next level of growth.
- Enable a liquidity event for the founders/owners.
- Reach new geographies and win larger mandates from clients.
Polestar’s role
Polestar worked with the shareholders to identify the key selling points and establish why bidders would buy the business. This formed the foundation for developing the Information Memorandum (IM), the buyers list and other sale information.
GPW’s clients come from across the globe, and is world renowned for its market knowledge. With this in mind, Polestar approached buyers from the US, Europe and Australia.
Whilst the buyers list was being finalised, Polestar created the IM. This enables the sellers explain the business in complete detail and thus build competitive tension. A well-positioned IM communicates key messages to the potential buyer:
- Highlights the strengths and potential of the business to the buyer whilst acknowledging any weaknesses alongside solutions.
- Generates competitive tension with the buyer as it presents rationale reasons why it would be a strong asset to different types of buyers.
- Increases the value of the business by demonstrating specific synergies for individual buyers.
- Brings the workload forward so that the shareholders are not distracted from driving the business to success later in the programme when the negotiations were underway.
Finally, the IM forms the bedrock of a competitive selling process, allowing a well-controlled auction to be run, with all bids made on the basis of the same information.
Buyers nearly always place a higher value on the business when its sale process is being professionally advised.
The marketing campaign
Polestar ran a thorough marketing campaign, sending out a teaser and NDA to 25 potential buyers. We reached out to potential buyers via phone, email, and Linkedin. Using strict confidentiality agreements, we shared the IMs and received bids from interested parties.
Offers and negotiations
GPW received a number of offers, with buyers from the UK, US, Europe and Australia. When looking through bids for clients, we consider a number of aspects: the total valuation (of course), but also how much cash is on the table vs. equity, possible earn-outs, how much equity staff will have to roll over, the buyers’ intentions for the business and their plans for the staff.
Matters to overcome
As in all deals, there were matters that needed careful management to ensure the needs of all parties could be met where possible. These included
- Management and bidders being across multiple time zones
- Providing modelling assistance to GPW’s finance team (FD had never done a deal before)
- Preparing the financial information for due diligence
- Ensuring that all parties agreed on revenue recognition
Managing different objectives for Exiting and remaining shareholders
Completion
After management meetings with a few selected parties, GPW decided to move forward with J.S. Held.
J.S. Held was the perfect fit for GPW;there were synergies on both sides of the table. GPW added to the strategic growth of J.S. Held’s Global Investigations Practice and presence in Europe, Asia Pacific, and the Middle East, while also achieving a bigger platform, especially in the US markets, while also now having access to specialised J.S. Held services
Philip Worman, former CEO of GPW said:
“GPW was delighted with the professional and highly commercial advice we received from Polestar. Charlie and the team anticipated road bumps and provided a highly responsive and practical approach to making this a successful deal. We were particularly pleased with the rapport they built up with the buy side”