Quantuma leads on MBO of advertising management software firm

19 December 2018 Consultancy.uk

UK-origin advertising management software firm Miles 33 has completed a management buyout (MBO) as it looks to make the most of growth opportunities in the US. Business advisory firm Quantuma helped oversee the buyout from owner Ares Capital.

A deal backed by Ethos Partners and Santander has seen the completion of the management buyout of Bracknell-based Miles 33 Group from Ares Capital. The supplier of editorial and advertising management software to the media and publishing industries was founded in 1976, and also provides wider corporate marketing automation software to agencies. In addition to its Bracknell headquarters, Miles 33 also boasts offices in in the US, Italy and Malaysia, while employing more than 80 people, and generating earnings before interest, tax, depreciation and amortisation in excess of £3 million.

Moving forward, the management team, led by Mike Moore, will look to expand its US clientele, with The Boston Globe, Maine Today Media and Record Journal amongst its clients. With backing from Ethos Partners and further growth coming from the rollout of its recently developed Gemstone software, as well as increasing sales of its Wave2 software in the wider corporate market, Miles 33’s management team believes it is well positioned to hit its revenue targets moving forward.

Miles 33 CEO Mike Moore commented, “We are looking forward to the next chapter in Miles 33’s history, to roll out our new products to provide best-in-class solutions and service to our customers. We expect to see a new phase of growth organically, and we will continue to look at acquisitions to expand our reach. After a period of ownership transition, we are delighted to have true long-term funding partners who are keen to support our strategy.”

Quantuma leads on MBO of advertising management software firm

The deal was led by a team from consulting firm Quantuma. Led by Partner Ian Barton and Director Adrian Howells, the Quantuma cohort provided advisory services to the management team, including identifying Ethos as the MBO’s equity partner, and finding debt funding from Carmen Peacock and Peter Abel of Santander.

Ian Barton said of the deal, “This highlights the benefits of partnership, and the tenacity by both funders and management in delivering this transaction. Having advised the management team prior to their first buyout in 2005, I have seen it develop its software and geographical footprint and adeptly position the business as one of the global market-leaders in its product offering. We are delighted to have helped management achieve its ambitions alongside Ethos in their first investment.”

Julian Carr, Principal at Ethos Partners, remarked on Quantuma’s involvement, “Quantuma has provided fantastic support and demonstrated a real depth of understanding of the business, drawn from Ian Barton’s long association with the team since 2005, which enabled us to appreciate the potential of the business and also to raise debt funding for the MBO in short order from Santander. We really appreciated the consistent advice and support to get the deal to a close, and we look forward to working together again.”

Other engagements

The corporate recovery and business advisory firm has seen a busy 2018, as a number of previously up-and-coming UK businesses have floundered amid difficult trading conditions. Having been tapped to oversee the turnaround of BCF Plumbing, administration of British-based mobile phone maker WileyFox, and the sale of Chelsea Apps Factory, Quantuma has been working to expand its headcount and bolster its capacity to meet the expanding expectations of its clients.

In October this saw the firm add to a growing list of new arrivals with two new Partners in its London headquarters. A month later, Quantuma further strengthened its South East presence with the launch of a new office in Eastbourne in order to meet rising demand in the region.

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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.