Drake Star Partners helps RTX raise £46 million in growth funding

18 May 2017 Consultancy.uk

RTX, a financial exchange platform for telecom operators, has raised an initial investment of £6 million growth capital from BOOST&Co with further committed funding of £40 million scheduled for the second half of the year. M&A firm Drake Star Partners acted as the financial adviser to RTX on the placement.

Founded in 2007, RTX Routetrader is a Global Carrier Exchange for Telecoms operators – the firm provides a platform where telecom operators can trade voice and SMS anonymously and in a real time secure environment. The company, headquartered in London, offers routing, settlement and switching services for carriers across the globe for their traffic, and boasts to be the first player in the market that operates a multi-currency, multi-language and real-time billing platform.

RTX’s technology also provides an innovative financial exchange, which facilitates global trading between small and large telecoms operators, supported by cash flow management and fast payment terms, as well as managing expedited payments, with no direct credit risk to RTX.

The company is experiencing a period of rapid development, RTX listed 18th in the 2015 Sunday Times Tech Track 100 (a list of the fastest growing technology companies in the UK) and 11th in the 2016 edition of the same ranking.

RTX Routetrader Exchange

£46 million in growth funding

To further accelerate growth, in line with the firm’s ambitions, RTX has raised an investment amounting to nearly £50 million across two periods. An initial injection of £6 million has already been received, with another round of £40 million scheduled for the second half of this year. The money, which follows a £6 million funding in 2015 backed by PNC Business Credit, an Asset Based Lender to UK mid-market companies, was raised with BOOST&Co, a London-based growth capital and venture debt player for SMEs founded in 2010.

Lance Mysyrowicz, Partner at BOOST&C, said: “RTX has a great range of products and services in the wholesale telecoms market. We are very happy to help them expand their product range and their destinations.”

Albert Mackey, RTX’s Chairman, added: “This investment will enable RTX to expand into new markets and help develop our exciting new product range and services. BOOST&Co have a true understanding of our market and I am delighted to be working with them.”

The transaction was supported by Drake Star Partners, a corporate finance firm serving the technology, media and communications sectors (TMC) established last year by the merger between Redwood Capital and LD&A Jupiter. Kruse Petersen, a Principal at the firm, commented, “RTX offers the industry’s only full stack solution and solves a major pain point for carriers. We are delighted that RTX can now further extend its financial services offering to carriers around the world.”

×

8 tips for successfully buying or selling a distressed business

18 April 2019 Consultancy.uk

Embarking on the sale of a business is one of the most challenging experiences a management team can undertake. Even serial dealmakers acknowledge that the transaction process can be gruelling, exposing management to a level of scrutiny and challenge through due diligence that can be distinctly uncomfortable.

So, to embark on a sale process when a business is in distress is twice as challenging. While management is urgently trying to keep the business afloat, they are simultaneously required to prepare it for scrutiny by potential acquirers. Tim Wainwright, an experienced Transactions Partner with Eight Advisory, says that this dual requirement means sellers of distressed businesses must focus on presenting their business in a way that supports buyers in identifying value, whilst simultaneously being open about the causes of distress. 

According to Wainwright, sellers of distressed businesses should focus on eight key aspects to ensure they are as well prepared as possible:

  • Cash: In a distressed situation cash truly is king. Accurate forecasting and day-by-day cash balances are often required to ensure any buyer is confident that scarce cash reserves are under proper control. 
  • Equity story and turnaround plan: Any buyer is going to want to understand the proposed turnaround strategy: how is the business going to enact its recovery and what value can be created that means the distressed business is worth saving? Clear presentation of this strategy is essential.
  • The business model: Clear demonstration of how the business model generates cash is required, with analysis that shows how financial performance will respond to key changes – whether these are positive improvements (e.g., increases in revenue) or emerging risks that further damage the business.  Demonstrating the business is resilient enough to cope with these changes can go a long way to assuring investors there is a viable future.
  • Management team: As outlined above, this is a challenging process. The management team are in it together and need to be consistent in presenting the turnaround. Above all, the team needs to be open about the underlying causes that resulted in the distressed situation arising.  A defensive management team who fail to acknowledge root causes of distress are unlikely to resolve the situation.

8 tips for successfully buying or selling a distressed business

  • Financing: More than in any traditional transaction, distressed businesses need to understand the impact on working capital. The distressed situation frequently results in costs rising as credit insurance becomes more difficult to obtain or as customers and suppliers reduce credit. Understanding how these unwind will be important to the potential investors.
  • Employees: Any restructuring programme can be difficult for employees. Maintaining open communications and respecting the need for consultation is the basic requirement. In successful turnarounds, employees are often deeply engaged in designing and developing solutions. Demonstrating a supportive, flexible employee base can often support the sale process.
  • Structuring: Understanding how to structure the business for the proposed acquisition can add significant value. Where possible, asset sales may be preferred, enabling buyers to move forward with limited liabilities. However, impacts on customers, employees and other stakeholders need to be considered.
  • Off balance sheet assets: In the course of selling a distressed business, additional attention is often given to communicating the value of items that may not be fully valued in the financial statements. Brands, intellectual property and historic tax losses are all examples of items that may be of significant value to a purchaser. Highlighting these aspects can make an acquisition more appealing.

“These eight focus areas can help to sell a distressed business and are important in reaching a successful outcome, but it should be noted that it will remain a challenging process,” Wainwright explains. 

With recent studies indicating that the valuation of distressed business is trending north. With increased appetite from buyers who are accustomed to taking on these situations, it is likely that more distressed deals will be seen in the coming months. “Preparing management teams as best as possible for delivering these will be key to ensuring these businesses can pass on to new owners who can hopefully drive the restructuring required to see these succeed,” Wainwright added.