Software Developer

This company had the opportunity to extend their reach into selected international markets, but as a subsidiary of a parent company, it was not positioned to do so. The parent company had a strong focus on different market offerings and couldn’t allocate the time and energy to pursue these opportunities. To maintain focus on it’s core offering, the Owner decided that it would be necessary to sell this subsidiary.

Selling this subsidiary posed special challenges as it was not a completely free-standing operation. An Exit Plan was needed that would ensure suitable leadership was in place for the separate business to run independently. It involved reviewing and adjusting financial records and the preparation of a credible business plan for the envisaged growth opportunity.

A range of capabilities was required to review and ready the business for sale. Following an initial briefing workshop, a diagnostic examination of the business was undertaken. This was discussed with the owner and an Exit Plan prepared to address the shortcomings in sale readiness.

A CFO Specialist assisted in the development of more robust financial reporting tailored to the requirements of an acquirer. An Exit Planning Specialist helped develop the business plan, address issues around the capabilities of a leader for the enterprise and worked alongside the owner to mentor them through the extended process.

The Exit Planning Specialist worked alongside the executive team to develop an Exit Plan that incorporates the vision, business plan and resource plan. This plan was implemented by the Specialist and over the following months to ensure that the optimal outcome for the vendor was achieved.

Phase 1: The Specialists were focused on three key tasks:

• Financial Systems and Accounts: The subsidiary had relied on the parent company for both system and management. Its P&L and Balance Sheet did not appropriately reflect the cost of operation and the evidence for normalising entries had to be secured.
• Leadership: Although a General Manager was in place, the individual lacked the experience necessary to run an independent company with growth ambitions. Significant leadership mentoring was undertaking, resulting in a capable leader who could continue post-sale.
• International Growth Strategy: While the company had a view that its software had relevance to hospitals in a range of overseas markets, they had not undertaken the level of market review and planning needed to articulate a credible growth strategy. The Specialist worked with the Executive Team to develop and test the new plan.
  
  

Phase 2: Discussions with the owner were held around the sale process, target valuation and potential acquirers. With the mandate to sell confirmed, a new phase commenced in which the key tasks were:

• Developing an Information Memorandum that effectively communicated the opportunity. This was a major undertaking relying on our expertise in undertaking M&A engagements.
• Ensuring that a Data Room was in place with all the documentation that an acquirer or investor typically requires. While the organisation had much of this in various repositories there were multiple elements that needed to be either collated, verified or developed.
• Preparing a list of target buyers in conjunction with the owner and utilising the Specialists market knowledge to ensure only acceptable parties were included.
• Approaching the targets and undertaking the initial sales activity. Qualified parties were then introduced to the vendor with the Specialist facilitating discussions between these groups.

Throughout this engagement, the Exit Specialists delivered the following outcomes for the business:

• Delivered and implemented a comprehensive Exit Plan
• Tested and delivered a credible growth strategy
• Developed a capable leader to continue post-sale
• Prepared the business for sale
• Developed a list of target buyers
• Secured acceptable letters of offer
• Completion of due diligence with potential buyer and acting as intermediary between the two parties

Following the successful due diligence, a final offer was made and accepted by the Owner.