PwC advises UK's largest private firm on $1.1 billion US acquisition

03 December 2018 Consultancy.uk

The North West transactions services team of Big Four firm PwC has advised Ineos Enterprises on a billion dollar deal to purchase US-based Ashland Global Holdings. The acquisition will increase the company’s global headcount by 1,300 people, spread over manufacturing sites in Europe, the Americas, Asia and the Middle East.

Founded in 1998 by Sir Jim Ratcliffe, Britain’s richest man, Ineos is the largest private firm in the UK. The multinational chemicals giant is headquartered in London, UK, and has been leveraging merger and acquisition activity in the past two years in order to grow further. In April 2017, this saw Ineos reach an agreement to buy the Forties pipeline system in the North Sea from BP for $250 million. The sale included terminals at Dalmeny and Kinneil, a site in Aberdeen, and the Forties Unity Platform.

Now, the chemicals group has closed a further $1.1 billion deal to buy the composites business of US-based Ashland Global Holdings. The deal comprises of some 20 manufacturing sites in Europe, North and South America, Asia and Middle East employing 1,300 people. It is expected to generate sales of more than $1.1 billion, when the transaction completes in the first half of 2019, following regulatory approval.

PwC advises UK's largest private firm on $1.1 billion US acquisition

In order to facilitate the deal, professional services firm PwC provided Ineos Enterprises with financial, tax and pensions due diligence together with sale and purchase agreement advice. The North West based PwC financial team involved was led by Syedul Hussain, supported by Iain Kyle, Mark McCaw, David Tomlinson, Laura Woodward, James Whyman and Tendai Masanzu. Tax advice was led by Elisabeth Hunt with support from Brian O’Neill, while pension advice was provided Charles Ward and Paul Brunger. Sale and purchase agreement advice was provided by Trevor Milne, Kevin Clark, Jonny Rodwell and Declan O’Hara.

Commenting on PwC’s role in the purchasing process, Andrew Brown, CFO of Ineos Enterprises, said, “Ineos have been a longstanding client of PwC and they have supported us through a number of successful transactions. I’d like to thank PwC for their excellent support which has enabled us to complete another strategic acquisition.”

Syedul Hussain, PwC Transaction Services Partner, added, “This has been a substantial and complex transaction involving PwC teams both in the UK and the US and I’m delighted that through our longstanding relationship with Ineos we have been able to support them once again in order to complete another successful transaction”

Recently PwC worked alongside Clearwater International to help Pizza Hut UK successfully complete its management buyout (MBO). The consultancies ensured the reputed £100 million deal went smoothly as the top brass at Pizza Hut UK wrested control of the high street fast food business from private equity backer Rutland Partners.

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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.