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 Business restructure and sale during a down turn

Context / Scope of project

The client, a medical business, had a considerable profit for a medium sized business and it had a number of opportunities to grow. Moreover, the business had an opportunity to increase its profitability by putting in place better systems, processes and governance.

The shareholders were divided on selling the business, especially due to the global financial crisis, different agendas and subsequent drastic reduction in M&A activity. PIP was asked to help get the company ready for sale by putting in place better systems, processes and governance, and ultimately to advise the shareholders on successfully selling the business.

Client achieved:

  • More than doubled appointments from sales calls
  • Improved labour productivity by 4%
  • Identified profitability improvements of 21%
  • Structured organisation with clear responsibilities and KPIs
  • New board structure with improved governance
  • Independent interim CEO getting the business ready for sale and being able to step down at acquirer’s request
  • Revised and improved shareholder agreements
  • Improved remuneration and incentive system focused on productivity, including an element of ‘attract, retain & develop’ the best people
  • More effective sales force
  • Roadmap for organic and non-organic expansion
  • High quality Information Memorandum, Data Room, and well managed Due Diligence
  • Lucrative deal for shareholders in a very difficult “no-debt” market environment and attractive target for the acquirers.

The client’s Chairman of the Board said after the process:
“PIP did a great job at restructuring the business and helping us to sell it successfully. It went really well. They really helped us to deliver a bunch of improvements very quickly. These also helped us to maintain momentum for the sale. They also ensured we were on the front foot the whole time. Everyone also enjoyed working with them.”

 

 

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What we did:

  • Revised corporate governance and set up a new best-practice board structure including appointment of independent chair
  • Facilitated shareholder meetings to achieve agreement of division of future profits
  • Reviewed and facilitated negotiation of the shareholder agreements
  • Provided a senior manager for the role of interim CEO
  • Put in place KPIs, reporting & performance management
  • Developed and signed off a new remuneration approach focused on productivity and talent retention
  • Identified utilisation improvements in key divisions
  • Introduced bottom-up budget process (including detailed staff roster and productivity planning) to broaden accountability for financial performance
  • Accelerated organic growth by:
    • Implementing sales force effectiveness initiatives (KPIs, improved communication, best practice sharing and performance management)
    • Adjusting sales force remuneration structure to focus efforts on closure of identified leads
    • Analysing market demand and identifying specific opportunity areas for sales force focus
    • Identifying geographic areas for starting up new greenfield operations
  • Helped to grow non-organically by:
    • Developing road map for non-organic growth for new areas and identifying potential acquisition targets
    • Identifying, negotiating and completing a high value bolt on M&A opportunity returning investment within 12 months.
  • Took costs out of the business by:
    • Improving labour efficiency through consolidation and reduction of spans of control
    • Changing accounting practices
    • Improving tactical and strategic purchasing practices
  • Facilitated the sales process by:
    • Writing high quality Information Memorandum, creating Data Room and managing Due Diligence Q&A process
    • Managing competitive bidding process including management presentations
    • Project managing the transaction and successful sale completion.

This resulted in one of the largest PE transactions in Australia at attractive multiple in a very challenging market environment in 2009.


 
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