Case Studies

Private Equity and Corporate Investment in Computer Hardware Company

Fiona Karlin was a key member of the team that negotiated four rounds of venture capital funding for a computer hardware company during a rapid arc between the company’s establishment as a research and development based business with one private equity backer, to its listing on both the London Stock Exchange and NASDAQ.

Activities included:

  • Writing the company’s original Business Plan
  • Securing capital backing from a range of private equity and computer industry sources
  • Complex negotiations with founders, existing investors, new funders and other stakeholders, including resolution of dilution and control issues
  • Leading the company’s response to complex due diligence exercises
  • Leading and co-ordinating the company’s instructions to US and UK lawyers in the production of complex Subscription and Shareholders’ Agreements
The activities supported and facilitated the company’s goal of funding rapid and sustainable growth in its chosen market sector, underpinned by a stable and diverse investor base.  This positioned the business for public flotation and eventual acquisition by a larger corporate entity.

Sale of Large Shop Fitting Business

Fiona Karlin and Peter Howard Jones were members of the corporate finance team which advised the company, a substantial shop fitting business, on the sale of the majority of its business to a major rival in the light of the desire of one of the two major shareholders to retire.

Their major objective was to maximise the cash consideration, particularly in light of a complicating factor whereby the company’s largest customer was taken over during the sale process.

The owners were of the opinion that maximum value was obtained and were particularly delighted with a tax clearance negotiated on their behalf with HMRC by accountants with whom Momentum worked closely. This resulted in the proceeds of sale being taxed at 10% in their hands.

Sale of Family Farming Company

Fiona Karlin and Peter Howard-Jones were the key members of an advisory team representing this family farming company. New banking facilities for the company had been successfully negotiated by Peter Howard-Jones some three years previously. However, it became clear that in the increasingly bleak environment for farming, any additional facilities which were available would be of a short-term nature. Fiona Karlin evaluated the owners’ long term goals with them. It emerged that the next generation had no interest in continuing the farming business. Accordingly the corporate finance team advised the owners, who were by then in their late fifties, to treat their situation as a conventional retirement planning scenario.

The asset structure was complex: a company, land held in personal names, bank loans, family loans and agricultural tenancies. The team worked with the owners to unravel the complexity and profile the majority of the assets for sale.

Key features were:

  • Structuring the deal for maximum tax efficiency, including obtaining Counsel’s opinion on a complex tax matter
  • Profiling the assets to appeal to the perceived likely buyers at maximum cash value
  • Keeping the bank and family lenders on side during the process
  • Performing a due diligence exercise in advance so any queries from potential purchasers could be answered at once.
The team took major responsibility for briefing both the land agents charged with making the sale and the solicitors representing the owners and worked closely with these advisers throughout the sale process.

The result was a sale of the bulk of the assets for a substantial sum, allowing repayment in full of bank and family borrowings and a very comfortable retirement for the owners

Expansion of Financial Services Business

Momentum has advised this financial services business on three transactions over a six year period:

  1. Purchase of a smaller business in the same sector which added substantially to turnover and profitability
  2. Restructuring of the expanded business, which had originally been established as a partnership, as a limited liability company in order to position the company for eventual sale as part of the owners’ long term strategic plan and in order to facilitate succession management objectives in the medium term
  3. Purchase of a niche business, adding further turnover and increasing profitability, while opening access to new markets and client groups for the
    existing business

In the case of the business purchases, Fiona Karlin worked with the Chief Executive to negotiate the terms of the purchases using payment structures designed to ensure that the purchaser received full value. She subsequently drafted Heads of Terms encapsulating the basis of the deals and produced and project managed instructions to the company’s solicitors to translate the Heads of Terms into legal agreements. Fiona also ensured that redundancy and TUPE issues arising from the transactions were appropriately handled by external human resources consultants.

In the case of the company restructuring, Fiona Karlin conducted sensitive negotiations with the founders of the business and newer stakeholders to ensure that the new company structure would best serve the business’ long term strategic goals, as well as facilitating short term change management requirements and medium term succession management objectives.