Foresight Group LLP (“Foresight”) announced the acquisition of 100% of the equity of Simple Power Limited (“SPL”) for an undisclosed sum, comprising a portfolio of 52 onshore sub-250kW single wind turbines located across Northern Ireland.

SPL has the largest distributed wind portfolio in Northern Ireland, with a total output in excess of 12MW across all the turbine sites, which benefit from some of the highest wind speeds in Europe.

The 52 wind turbines are fully operational and OFGEM accredited. The portfolio qualifies for participation in the recently launched I-SEM market in Ireland. Each turbine benefits from a standardised lease, grid connection and PPA, with long-term fixed price O&M agreements in place with a number of experienced third-party contractors.

In the past five years, Foresight has mobilised investment of more than £200 million into the Renewable Energy sector in Northern Ireland building a portfolio of 12 Bioenergy and Waste projects alongside this wind portfolio. Together, these projects generate enough clean energy to power the equivalent of some 66,000 homes, and Foresight has a strong pipeline of opportunities in Northern Ireland for future deployment.

Deloitte’s role covered financial DD, tax DD, tax advisory and transaction structuring; all led from their Belfast office.

Avis Budget Group, Inc. (NASDAQ: CAR), a leading mobility solutions provider, has announced it has acquired Turiscar Group, a well-established, family-owned, car rental company in Portugal. The acquisition will see Avis Budget Group bring on board this leading organisation in Portugal with two distinct brands: Turiscar, a well-respected rental provider primarily in the corporate market, including light commercial vehicles; and its sister brand Turisprime, focused on leisure and tourism business. The acquisition adds approximately 3,000 vehicles to Avis Budget Group’s network in Portugal and is a key step in strengthening its commitment to the local market.

Mark Servodidio, President, International, Avis Budget Group commented:

“We are delighted to announce our acquisition of Turiscar in Portugal and welcome its employees to the Group. The offerings of both brands not only extend our Portuguese network, but also increase our ability to address the needs of a wide range of customers.”

“Following the recent acquisitions of Morini in Italy and ACL in the UK, this acquisition marks another step in our international expansion strategy and demonstrates the pace and momentum in the region and we look forward to continuing this progress.”

The acquisition closed 3^rd October 2018. The Environmental Due Diligence was conducted by EKI Environment & Water.

VILAF advised Vina SCG Chemicals Co., Ltd. (“VSCG”), its wholly-owned subsidiary of Siam Cement Group, in a sequence of transactions to buy out 25% and 29% of the equity stakes in Long Son Petrochemicals Company Limited (“LSP”) from Qatar Petroleum and PetroVietnam respectively. The chain of transactions was completed in June 2018.

The transactions increased Siam Cement Group’s equity stakes in LSP from 46% to 100%, of which VSCG holds 82% and Thai Plastic and Chemicals Public Co. Ltd holds 18%.

Long Son Petrochemicals project, located in Vung Tau City (100 km from Ho Chi Minh City), is a key petrol and oil project of Vietnam.  Long Son is the third petrochemical complex in Viet Nam after Dung Quat oil refinery and Nghi Son oil refinery and petrochemical complex.

Licensed in 2008 with an initial investment capital of $3.7 billion, the project has raised up to $5.4 billion in investment.

From VILAF, Partner Vo Ha Duyen advised VSCG in both transactions with the support of Counsel Trinh Luong Ngoc.

Claranet, a European leader in the hosting and management of critical applications, has announced the acquisition of Italian DevOps and cloud specialist XPeppers.

Founded in 2010, XPeppers is a value-added systems integrator specialising in AWS managed services, DevOps and Agile technologies. Having built strong relationships with a number of large businesses, XPeppers has become a respected partner for customers who need to manage critical applications through AWS and is also an AWS Partner Network (APN) training partner. Its expertise in DevOps and Agile tools also gives it the critical capabilities to help customers manage digital transformation. XPeppers has an annual turnover of around €4 million, with its customers including Conde Nast and Mercury Payments.

This latest merger has enabled Claranet to further strengthen its AWS offer in the Italian market and confirms the Group’s position as a natural leader in the public cloud market in the rapidly growing European market. This is in line with Claranet’s ambitious expansion strategy, which has seen the Group grow rapidly in Europe in recent years, both through organic growth and acquisitions. XPeppers represents the latest of these acquisitions.

Law firm Masotti Berger Cassella acted as Claranet’s tax and legal adviser. Key individuals that assisted with the transaction were Partners Luca Masotti and Francesca Masotti and Associates Matteo Castronovo, Barbara Bertini and Giuliano Gadiva.

Masotti Berger Cassella acted as legal adviser to Americas Power Partners, an American company part of the Armstrong Group, in its acquisition of Sammartein Biogas Società Agricola. Based in the US, Americas Power Partners, Inc. engages in generating electricity, primarily utilising cogeneration technologies. The company focuses on developing domestic industrial cogeneration plants that produce electricity and thermal energy for sale under long-term contracts with industrial and commercial users, power wholesalers, and public utilities. Based in Modena, Italy, Sammartein Biogas Societa' Agricola owns and operates a biogas plant.

Masotti Berger Cassella’s team included Partner Mascia Cassella and Associates Stefano Del Vecchio, Roberta Brussolo and Matteo Castronovo.

The transaction is part of Americas Power Partners’ larger investment project in Italy, which will include a series of biogas plants acquisitions.

Ascential plc (LSE: ASCL.L), the global specialist information company, has announced the acquisition of the entire share capital of WARC Limited for an initial cash consideration of £19.5m (subject to a normalised working capital adjustment), plus deferred consideration of £4.5m payable in 2019.

WARC is a global digital subscription business that helps brands, agencies and media platforms assess marketing effectiveness across all channels. It is the global leader in providing information and insight to understand and measure multi-channel advertising effectiveness. Founded in 1985, the business offers advertising best practice, evidence and insights from the world's leading brands. The business employs approximately 90 people with offices in London, Washington DC and Singapore and serves approximately 1,200 customers globally. The business strengthens Ascential’s digital product offering in the marketing discipline to span both creative excellence and marketing effectiveness and the intention is to combine WARC with Cannes Lions’ The Work, to form a digital subscription product of scale.

London law firm Joelson acted as advisers to the Founder and selling shareholders of WARC on the sale to Ascential, with the firm’s Corporate and Commercial team providing legal counsel led by Chairman Sheldon Cordell and Partner Phil Hails-Smith. Fellow Corporate and Commercial Partner Philippa Sturt also represented WARC in the transaction, along with solicitor Maria Michael.

Corporate Partner Phil Hails-Smith said: “We are delighted to have worked with the WARC team on this acquisition. We have a strong reputation for acting for Founders and selling shareholders on transactions of this nature and we are pleased to have helped with this successful sale. Our expertise in the media space was a key factor in securing this mandate and enabled us to respond to the challenging timetable on this transaction.”

Tapia, Linares y Alfaro (“Talial”) through Linklaters LLP, London, advised a group of Banks on a high yield bond offering by means of which Blackstone would finance a portion of the acquisition price of Cirsa Gaming Corporation S.A (“Cirsa”). LHMC Finco S.à r.l., a Blackstone special purpose vehicle, has completed a Rule 144A and Regulation S offering of €1.5 billion (equivalent) of euro denominated and dollar denominated Senior Secured Notes.

Talial first assisted the Blackstone Group, through Urina Menendez, London, with multi-jurisdictional legal due diligence regarding Cirsa and a selected number of its direct or indirect subsidiaries. Talial performed legal due diligence on all of Cirsa Gaming Corporation’s Panamanian subsidiaries and assisted Blackstone in obtaining the necessary governmental authorizations and all Panama Law related matters.

Later, Talial was also contacted by Linklaters LLP, London, to advise the group of Banks (initial purchaser) involved in the transaction on Panama Law related matters and the issuance of bonds.

Talial’s  Due Diligence M&A team was led by Fernando A. Linares, with the assistance of  Eloy Alfaro de Alba, both partners of the firm, and other firms’ experts in the corporate, regulatory, labour, taxation, intellectual property, real state and compliance fields, among others. Partners Eloy Alfaro de Alba and Fernando A. Linares also assisted with the financing part of the transaction (bond issue).

Uber is close to securing an investment deal with Softbank, which if succesful, could amount to £10bn according to reports.

TechCrunch were given the following statement: “We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment. We believe this agreement is a strong vote of confidence in Uber’s long-term potential… strengthening our corporate governance.”

Uber have said the money is going to aid them in their international expansion and technological advancements. The aim of the expansion is partly due to the competition they are currently experiencing.

As well as an initial $1bn investment, Softbank will attempt to buy up £6.8bn ($9bn) worth of shares, resulting in a total stake of 14% in Uber. However, this is reliant on the agreement of a fairly complex tender offer.

The tender offer is set to take place on November 28th and could go on for 20 business days, making it possibly the biggest secondary transaction ever.

Given that any deal would be reliant on existing Uber shareholders selling their stakes, the process will require more work before it can be finalised. To help spread the word about their tender offer to existing shareholders including venture capitalists and ex-employees, Uber plan on putting adverts into newspapers.

According to TechCrunch, the following statement was given to reporters via Softbank on behalf of Rajeev Misra, CEO of SoftBank Investment Advisors: “After a long and arduous process of several months it looks like Uber and its shareholders have agreed to commence with a tender process and engage with SoftBank. By no means is our investment decided. We are interested in Uber but the final deal will depend on the tender price and a minimum percentage shareholding for SoftBank.”

The statement made by Softbank reveals that the deal has not been confirmed and will depend on the agreement of the tender price and percentage shareholding for Softbank.

This investment is seen by many as potentially crucial for Uber. Up until now, employees were unable to sell shares of the company and this investment will aid them in turning paper riches into cash.

It’s been a difficult year for Uber so far with legal battles involving Alphabets self-driving car division, the loss of their licence to operate in London and attacks on their company culture. The CEO Travis Kalanick was also forced to step down in June this year amid several scandals and legal wrangling with investors.

The investment made by Softbank might not only provide a welcome boost at a difficult time, it could very well be vital for Ubers future.

Although the exact start date of the financial crash will differ depending on who you talk to, August 2017 was widely acknowledged as the 10-year anniversary of the first signs of the global financial crisis. In the two years that followed, 2008 and 2009 saw the shockwaves of the crash hit the M&A industry, with global M&A volumes falling over 40%, and reported deal values by nearly 55%.

The results of the crash changed the market significantly. Companies now implement increased geographical diversification and investment strategies in secondary markets. In the UK alone, Chinese investment has tripled and US activity has grown 40% since 2014.

Ten years on from the crash, volumes are 5% higher than the 2008 peak, disclosed aggregate values are 12% higher, and the proportion of transactions with undisclosed values is higher than ever, at nearly 60%*. So what happened to the M&A market over the last decade?

Looking back: global transaction volumes

 In the year to the 31st July 2008, overall global transaction volumes fell 7.5% to 9,425 global reported deals. In the following year, they fell another 37%, to a trough of only 60% of their 2008 level (5,962 deals) as companies and investors chose to hold tight and wait out the storm. The drop resulted from lower deal values in sinking equity markets, access to financing for larger transactions and general uncertainty on the economic outlook.

The effects hit some regions harder than others in 2009. The DAX region (Germany, Austria, Switzerland) saw a 24% fall, The Iberian Peninsula (Spain and Portugal) dropped dramatically by 34% and the Nordic region was hit harder, with an abrupt 7% decline in 2008 and a further 39% decline in 2009, pushing transaction volumes 43% below their peak.  The Indochinese market followed a similar pattern with a gentler decline, with volumes growing 1.6% in 2008 (from 368 to 374), then falling by a further 22.5% in 2009.

The UK and North America, the traditional engines of transaction volume, which together accounted for around 75% of deals in 2008, saw the fastest declines. UK volumes fell 7.5% and US volumes by nearly 9%. In 2009, it was the UK market which saw the most severe contraction, as volumes fell by half, pushing transaction numbers down to 817 from 1,762 in 2007. This decline in volumes over the two-year period was significantly greater than the decline anywhere else.

The peak and the trough: Disclosed values  

Disclosed values tell a more nuanced story. The headlines looked worse, with a decline in global disclosed value of 55%. This makes sense, because smaller deals are less likely to have valuations disclosed. This is usually due to private shareholders not wanting the financial terms to be disclosed and no regulatory pressure to disclose deals below a certain threshold.

This varied by region far more than the slowdown in volumes did. For example, the US had the most abrupt decline in 2008 (down 48%) and a gentler decline in 2009 (down a further 17%, for an overall 57% reduction in reported transaction values). In contrast, the DAX region actually increased deal values in 2008, albeit by less than 1%, then saw a 44% slowdown in 2009.

The UK’s decline mirrored the DAX, but more starkly, with values declining by less than 1% in 2008 then dropping 52% in 2009. The Nordics suffered even more in value terms, as reported aggregate values dropped by nearly a quarter (24%) in 2008 and a further 72% in 2009, closing nearly 80% down on the peak.

In the year to 2007, the UK and North America accounted for 82% of global reported transaction value; in the year to 2009, despite their precipitous declines, they still accounted for 80% of global reported value.

Overall, aggregate reported deal values fell faster than transaction volumes, as larger deals which tend to be higher-risk were cancelled or delayed and, wherever possible, sellers sought to avoid disclosing the terms of transactions which may well have been concluded at lower valuations than they would have been 12 or 18 months earlier.

10 years on: a market snapshot

Ten years after these significant declines in volume and reported value, what does the landscape look like?

The North American market has increased volumes 80% from the 2009 trough, to 6,067 deals in the 12 months to 31 July 2017, while reported transaction value has surged at more than double that rate, increasing 170% from 2009 to 2017 and is now 16% above the 2007 peak. The business services and media and technology sectors remain key to US growth, together accounting for half of all inbound acquisitions, with the world’s best-developed funding environment for start-up and high-growth companies.

The DAX region shows a similar profile, with transaction volumes up 58% and values nearly doubling to 130% of their 2009 level. The Iberian Peninsula has shown gentler growth and remains below its 2007 peak. With volumes increasing 40% from 2009 to 2017, aggregate values remain 30% down on their 2007 levels while volumes. However, as the Spanish economy turns a corner, Chinese interest in the market rose markedly this year.

Indochinese volumes are up the most compared to 2007, now at 30% above their peak, while values have nearly tripled - with aggregate reported transaction values topping £100bn compared to £26bn in 2007. Transaction flow between China and Europe is expected to grow even stronger.

The Nordic region has shown the greatest growth, as volumes more than doubled from 2009 to 2017 and are now 24% above their 2007 peak, while aggregate valuations more than tripled from £14bn to £55bn, although this is still 15% down on the 2007 peak of £65bn. Chinese interest remains important in this market and American acquisitions increased quickly in the second half of 2016.

Volumes in the UK market have nearly doubled from 2009 to 2017, but remain 8% down on their 2007 peak, while reported values grew 61% from 2009 and remain 23% down.

 To infinity and beyond

 Despite the effects of the crash still reverberating through the political sphere, the market as a whole has shown itself remarkably sanguine about what would previously have been considered major macro-political uncertainty. Political change and economic uncertainty in Europe, the unpredictable statements and actions of President Trump, and the self-imposed uncertainty caused by the Brexit vote and subsequent approach to negotiations have all had relatively little effect on the markets.

This remains a strong sellers’ market. The drive for growth from strategic acquirers has seen volumes rise steadily since the trough, and accelerate since 2011, albeit with a few bumps in the road causing short-term and temporary slowdowns.

The wall of private equity money in search of high-quality investment opportunities, combined with the influx of new investors such as debt and pension funds that are willing to make direct private equity-style investments for bond-like yields, have driven values for differentiated, market-leading businesses to compelling levels not seen for over 10 years.

The ready availability of super-cheap debt has helped fuel and finance these valuations. Owners of well-performing businesses considering their exit options may be well-advised to take advantage of these conditions, which have now surpassed the previous highs of the 2007 peak in most markets.

*  Livingstone Global Acquirer report H2 2016 http://livingstonepartners.com/wp-content/uploads/2017/03/Global-Acquirer-Trends.Digital.pdf

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With the ups and downs of global uncertainty in today’s markets finding a buyer can prove difficult. Here Finance Monthly hears from Lord Leigh of Hurley of Cavendish Corporate Finance LLP on his five key tips to ensuring a business gives itself the best chance of attracting an overseas buyer.

The UK continues to be one of the most attractive markets for foreign direct investment (FDI) and inbound M&A activity. According to Ernst & Young’s 2017 ‘European Attractiveness Survey’, the UK was named the second most attractive market for FDI while Lloyds Banking Group’s June Investor Sentiment Index revealed that UK investor sentiment remains at near record levels, with overall sentiment up 3.87% compared to the same period last year.

Both these indicators are positive signals for potential overseas buyers of British companies and a fall in Sterling has also helped to make UK businesses more attractive, though the continued robustness of the UK economy and the performance of the corporate sector also underpin healthy M&A activity. Mergermarket reports that in H1 2017, the UK was responsible for 22% of all European M&A inbound activity, with UK activity totalling £46.6bn and Europe totalling $211.1bn.

Despite this encouraging backdrop, uncertainty, largely surrounding the outcome of Brexit, still persists, so it’s important for British businesses to take all the steps they can to ensure they are as attractive as possible to foreign buyers, who typically pay a premium compared to domestic buyers when acquiring a UK company.

1. Understand your buyer

The more aware you are of the foreign buyers’ motive for purchasing your business, the more value you will able to demonstrate to the prospect. There are typically four reasons an overseas buyer would be interested in a UK business: it provides access to the British market, or an entryway into European and international markets, it has attractive tech and intellectual property potential, or the business is able to merge with one of the foreign buyers’ existing businesses to generate cost savings and efficiencies. Identifying a buyers’ intention before engaging in the deal process will significantly increase your chances of selling and achieving maximum value for your company.

2. Develop a post-Brexit strategy

Although the UK is currently well positioned for FDI, the EY 2017 Attractiveness Survey reveals that a number of respondents think that, in the medium-term, the UK’s attractiveness as an FDI location will deteriorate, with 31% of respondent investor’s worldwide saying they expect this to be the case in the coming three years, although 32% say they expect it to improve. One can assume that this is potentially due to the uncertainty around Brexit and the UK’s access to the European single market.

To counter this scepticism, it is important for businesses to develop a post-Brexit strategy. For companies who do not export outside Britain, they will need to demonstrate that they have the capabilities to survive and grow solely in the UK market. Companies that do export outside of the UK will need to show that they can continue to easily sell their goods in the EU and have potential international markets they can access if selling in the EU becomes more problematic.  A good example is the recent sale of smoked salmon producer John Ross Junior, a company with a Royal Warrant, which we advised. The company proved its international capabilities by highlighting the 30 countries they supply and the opportunity for future growth in other regions, which were key factors in the decision of publicly listed Estonian company, PR Foods, to buy the business.

3. Foster key relationships

Foreign buyers want to see a highly connected UK business, and having strong networks is key for sealing contracts and fostering growth. Prospective buyers want to be reassured that the company does not have particular reliance on any one customer and should they purchase the business, there will be high retention rate among customers, employees and suppliers.

4. Update your books

The extent of the due diligence that the buyer will undertake depends on the sector, the buyer’s existing knowledge of the target company and the laws of that country. English law states ‘caveat emptor’ or ‘buyer beware’, meaning that the buyer alone is responsible for checking the quality and suitability of the company before a final sale is made. Having updated financial statements and a strong finance team to help respond to the likely multiple queries a potential buyer will have, should ensure a smooth and speedy process when engaging with a prospective buyer.

5. Appoint an advisor with specialist expertise

Selecting the right advisor for a sales process is key, especially when an overseas buyer is involved. Compared to domestic M&A, foreign deals demand an understanding of cultural differences, state versus domestic laws, and regulatory approval processes. Engaging an advisor with specialist expertise in your sector, the mid-size market and that has a global reach to find potential acquirers will optimise the sales process and ensure that the deal executed will be the best outcome for your business.

In today's low interest rate environment, leverage remains the smart option for financing mid-market acquisitions. For starters, it satisfies the corporate desire for enhanced returns on equity and cash conservation. Moreover, the competition for deals among established lenders and the many recent entrants into the market has driven down loan pricing and diversified product offerings making a tailor-made solution more achievable than ever before.

Lee Federman, Partner in the Banking and Finance team at law firm Dentons, here sets out some of the key issues borrowers should be aware of before embarking on a search for the right financing arrangements.

Evolving lending landscape

While established clearing and investment bank lenders remain active, they have been increasingly limited in their activities by regulatory and capital constraints. This has allowed debt funds such as Ares, Alcentra and KKR, to increase their market share with fixed income becoming the strategic asset of choice for investors. For a higher coupon, specialist debt funds have been able to offer increased leverage, larger bilateral commitments and greater covenant headroom and flexibility. So called 'challenger banks' such as OakNorth and Metro are also increasingly visible, particularly at the smaller end of the market.

Cost of funds

The primary financing consideration for a borrower will be the overall cost of funds. Lenders' 'all in yield' will likely include a fixed margin (set over LIBOR or EURIBOR potentially ratcheting up or down in line with the borrower group's prevailing leverage), arrangement fees payable at closing and any other periodic fees such as commitment fees on working capital facilities. Fees will also arise if a hedging product such as a cap or collar is purchased to protect against fluctuations in the underlying interest rate.

In a market currently suffering from a lack of M&A activity, strong borrowers often negotiate with debt providers in parallel to create the competitive tension needed to push down pricing and improve terms – specialist debt advisory firms can further facilitate this process.

Cash retention

Cash retention will also be at the forefront of the CFO's mind. Banks typically expect at least part of their term facilities to amortise quarterly to aid deleveraging and reduce refinancing risk. Some debt funds however may allow a more relaxed amortisation profile or potentially even a single bullet repayment at maturity. Debt funds rely on a stable coupon to satisfy their investors' return requirements and are often comfortable for available cash to remain in the business for reinvestment and income generation purposes.

Mandatory prepayments

All lenders will expect their loans to be immediately prepayable upon a change of control of the borrower or where it becomes unlawful for the lender to continue to lend. Debt funds may however be more relaxed than banks on mandatory prepayments out of net disposal or insurance proceeds and also in relation to the annual excess cashflow sweep after debt service (the amount of which is usually determined in line with leverage levels).

Financial covenants

Borrowers will have to comply with up to four financial covenants on an acquisition financing, each of which is designed to test its financial health and serve as an early warning sign if its condition starts to deteriorate:

• Leverage. This is the ratio of net debt to earnings and tests the overall sustainability of debt in the borrower's business. It is typically calculated on an adjusted basis to take into account acquisitions or disposals over the relevant testing period.

• Cashflow Cover. This is essentially a liquidity ratio matching the Group's operating cashflow against its principal and interest debt service obligations (otherwise known as the 1:1 test).

• Interest Cover. This is the ratio of earnings to interest costs and demonstrates the ease with which the borrower can meet its cash pay interest expense from operating profits.

• Capex. This is an annual limit on capital expenditure spend set with limited headroom against the borrower's business plan. Stronger borrowers will seek further operational flexibility by carrying forward and/or carrying back unused capex allowances to preceding and/or succeeding financial years.

It is important that the financial covenant related definitions in the loan documentation conform to the agreed financial model and the expectations of the CFO. Each of these financial covenants (with the exception of the capex covenant) is tested quarterly looking back at the results from the last 12 months.

In the current competitive lending market, some lenders may be willing to drop some of these four covenants (‘covenant loose’) or all of them (‘covenant lite’) – the latter is however still fairly rare for mid-market deals

Equity cures

Strong borrowers will seek to negotiate the right to inject new equity into the structure to cure an actual or potential breach of financial covenant and stave off any potential lender enforcement action. To the extent acceptable to the lender, such new money will likely be limited in usage and amount. At least part of it will also have to be applied in prepayment of the loan.

Negative covenants

Negative covenants are another key part of a lender's credit protection. They are designed to restrict the borrower from undertaking certain actions which may cause value leakage out of the borrower's group (e.g. disposals, acquisitions, debt incurrence, distributions to shareholders) and are subject to a set of pre-agreed exceptions and monetary baskets. The borrower will focus on these exceptions more than any other area of the loan documentation to ensure that it has appropriate flexibility to operate unfettered in the ordinary course of its business and to implement its business plan and growth objectives.

Security and guarantees

Lenders' principal downside protection comes in the form of asset security and guarantees. Typically, lenders will expect to receive security and guarantees from entities in the group representing at least 85% of the earnings, turnover and assets of the relevant group (including share pledges over all material entities). On cross border transactions, local lawyers should always be instructed as early as possible to identify any issues in or limitations to the grant of security or guarantees and a set of agreed security principles should be drawn up.

Financial information

Lenders will always expect a raft of detailed financial information. Monthly management accounts, quarterly financials and annual audited financial statements will be required along with quarterly financial covenant compliance certificates. Borrowers will further be expected to provide a budget, financial model and give an annual presentation on the on-going business and financial performance of the borrower.

Acquisition diligence

Lenders will not typically undertake their own diligence on the target company but they will expect to be able to rely on all due diligence reports prepared for the borrower. This supplements the representations provided to them in the loan agreement. The lender will also expect to be kept informed on the negotiations on the acquisition documents and to receive copies of the signed versions as a closing condition to the loan.

In our April Thought Leader Section, we look at the acquisition of one of Europe’s most-awarded creative independent agencies - Lemz, by Havas Group - one of the world’s largest communication groups. We had the opportunity to interview Adriana Roman-Holly – Director at Ciesco Group, who led the team that advised Lemz. Here she tells us about Ciesco Group’s involvement in the transaction and the challenges along the way, while also discussing the global M&A activity in 2016 and 2017.

Could you tell us a bit about the transaction and Ciesco Group’s involvement in it?

Havas Group (HAV:EN; market cap of €3.0bn), one of the world’s largest communication groups acquired Amsterdam-based Lemz, one of Europe’s most-awarded creative independent agencies.

Widely recognised as a pioneer of the pro-social marketing movement, Lemz uses its innovative creative consulting approach to “help brands make sense” by delivering creative campaigns that are meaningful, purpose-driven and socially relevant.

Building on their successful track record, Lemz shareholders acknowledged the need to address strategic growth options for the company to maximise the future prospects and value of the business. In Havas Group they have found a like-minded partner sharing similar strategic ambitions, passion and culture. Lemz will join forces with Havas Boondoggle, the Group’s existing Amsterdam-based creative agency. The new 80-talent-strong agency, “Havas Lemz”, will leverage on the Group’s Together strategy to build a powerful creative hub.

Ciesco Group acted as exclusive advisors to the shareholders of Lemz. We were mandated to seek a like-minded partner that would enable Lemz to operate on a larger scale and increase their impact on the social good scene, without compromising the high-quality creative output the agency has been known for. Havas Group was identified as the perfect fit in terms of vision, ambition, making sense support and chemistry with Lemz. We pursued a very structured process and managed the end-to-end process - from preparing the business for sale through to negotiation of the sale and purchase agreement on behalf of the shareholders with a major strategic player with complementary strengths.

Given Havas’s commitment to creating meaningful connections between people and brands through creativity, media and innovation and Lemz’s pro-social creative credentials, this transaction makes sense for all involved. It is a huge opportunity for Lemz, its talents and clients to benefit from becoming part of a bigger group. Using the creative firepower of Lemz, Havas can expect to deliver a number of stellar campaigns, while standing for something beyond advertising. The new 80-talent-strong agency Havas-Lemz is set to become the “most meaningful agency in the Netherlands”, a unique hub where ideas, people and talents flourish and turn into impactful integrated creativity.

What were the challenges in relation to finding the best possible partner for Lemz?

 A deal like this will always face multiple challenges. Finding the perfect partner who would share Lemz’s vision and ambitions, managing value expectations and execution risks were all critical. Through our unrivalled experience, individual approach and vast industry knowledge we worked together with Lemz shareholders and provided them with independent, sound advice, efficient execution and direct support throughout the process.

How would you describe 2016’s global M&A activity in technology enabled-media and marketing sectors?

 By all accounts, 2016 was an extraordinary year that brought with it a myriad of opportunities and challenges across the globe and presented a wide scope of issues and events. Despite the tumultuous year, M&A opportunities within the sector remained buoyant and firmly on the agenda of many corporates.

Each year our market intelligence team at Ciesco tracks global M&A transactions in the sector. We tracked 1,175 M&A transactions throughout 2016, an increase of 6% year on year in global deal activity. The announced deal values totaled over $82bn (excluding the three mega-deals), up 36% from the prior year. This marks the third consecutive year in which deal activity has increased. Marketing Technology remained the most active sector in 2016 in the digital, marketing, media and related technology industry. Despite being the most active sector, the number of deals announced fell by 12% to 102 deals (116 in 2015). As with the previous year, the Mobile sector was the second most popular sector behind Marketing Technology. Similarly to Marketing Technology, deal volume in the Mobile sector was also down slightly, from 102 in 2015 to 90 in 2016. The next most popular sectors were Advertising & Creative, Data & Analytics, Public Relations, Digital Media, and eCRM.

This remains an exciting and dynamic sector for M&A with new technology entrants, start-ups offering specific niche disciplines, a broad array of new media channels that are all combining to disrupt conventional models.

What is Ciesco’s outlook for M&A activity in 2017?

 We expect 2017 to be a busy year with new business models developing where their services are powered by sophisticated data capture and analysis and that fuse high quality real-time creative content with integrated media solutions for delivery and measurement through the new media channels. Independent media and data analytics businesses will command a premium valuation in 2017 M&A activity.

We also expect consultancies to continue to make inroads into the marketing sector with an emphasis on strategy/creative and digital services. This will continue to threaten the big agency networks who will struggle to compete with the combination of the traditional and new services now being delivered by the consultancy firms.

About Adriana Roman-Holly

Adriana leads Ciesco’s day to day corporate finance work both originating and working on a wide variety of transactions. Prior to joining Ciesco, she spent 5 years at Pall Mall Capital, a London-based investment banking boutique, handling corporate finance advisory and M&A transactions, as well as working on Equity and Debt placements across a wide range of sectors (business services, leisure, infrastructure, technology, consumer products, etc.). Her earlier career included US experience where she worked on US and international assignments at Brown Gibbons Lang & Company, a leading Midwest investment banking firm, as well as acting as a Project Manager for a London-based global consultancy firm specialising in business intelligence services.

Adriana has a MBA degree in Banking & Finance from Case Western Reserve University (US), as well as an MA in International Economic Relations.

Firm Profile

 Ciesco is a London-based boutique corporate finance advisory firm, specialising in M&A advisory and business strategy for the digital, media, marketing and technology sectors, with coverage of Europe, Asia and North America. Ciesco works with entrepreneurs and global corporates who require specialist advice on domestic or cross-border transactions, divestitures and business strategy, as well as private equity firms looking for growth or exit opportunities for their portfolio companies. Led by practitioners with deep industry experience and expertise within new media and disruptive technologies, Ciesco is able to deliver its clients independent and sound advice and execution, as well as access to an extensive network of direct contacts with high quality investors globally.

Website: http://ciescogroup.com/