Selling a document management business: Preview Services

Acuity Advisors helped to oversee the sale of one of Europe’s leading document management companies

Here is how we achieved it…

The opportunity

Preview Services are one of the biggest independent document management and archiving businesses in Europe. The company had enjoyed eight years of solid growth but now wanted to find a buyer who could take it to the next level. Preview hired corporate finance advisors, Acuity Advisors, to successfully broker the business sale to allow it to move forward to greater commercial heights.

The business

Preview Services was set up in 2002 to offer a professional and comprehensive range of document management and archiving services, aimed at boosting efficiency and cutting the costs of managing and safeguarding vital documents. Based in Middlesex, the 200-person firm has steadily nurtured a broad portfolio of satisfied clients, including household names such as The AA, Philips and Waterstone’s. In doing so, Preview had become a valued Business Process Outsourcing (BPO) solution for many organisations throughout the UK. As part of this growth, Preview had also developed the largest scanning bureau site in Europe. Located near Heathrow, the document management centre is capable of scanning over 1.5 million images a day and is seen by many as the benchmark for the industry. The scanning facility was established with future growth in mind and utilises cutting-edge technology especially in the shape of its state-of-the-art IBML Imagetrac scanners.

Preview had expanded its document management business via organic growth and a buy-and-build strategy incorporating several acquisitions giving the management team extensive mergers and acquisitions experience. It had also achieved multiple ISO certifications enabling sensitive high-profile public sector contracts to be fulfilled, an example being a contract to scan and manage examination papers in the UK for a number of examining bodies. Its audited accounts indicated it was a highly profitable business delivering strong growth.

The need for a business sale

Preview’s founders launched the company with a five-year exit plan and were now committed to a business sale. But they wanted to find a good home for its top-level and talented management team, which had been largely responsible for the company’s success. The shareholders and management knew that the business was cash rich but still lacked the balance sheet strength to compete for lucrative large multi-year public sector contracts. This was starting to inhibit growth and the potential of the business.

“Over the past eight years we have built Preview Services into a fantastic company, which offers a broad range of services to a strong and growing customer base. It was time to find a strategic acquirer who could take Preview forward to the next chapter. However, we also needed to do this quickly without distracting the management team from the day-to-day running of the company,” explained Preview’s co-founder Kathy Bruce.

But to achieve its objective, Preview faced three major challenges:

1 – Source a business broker who understood the complexity of an IT intensive document management business

Preview wanted to use a corporate finance advisor who could identify the complexity of the business, understand its value proposition and fully appreciate the value of its IT systems. Any advisor would need to effectively communicate the growth potential and value to possible strategic acquirers.

2 – Needed to find a corporate finance boutique rather than a larger corporate finance practice

Preview’s founders realised that they wanted to work with a corporate finance boutique in the knowledge that their exit strategy would be given top priority. A boutique, rather than a larger practice, would be able to apply a more senior level of resource consistently throughout the process and yield a better result.

3 – Wanted to ensure that prospective international acquirers were targeted and approached effectively

Preview’s founders anticipated that there would be significant interest in their business from overseas organisations looking for a way to enter the UK market through acquisition. Their advisor would need to have both the international network and proven track record to work internationally in order to succeed.

Preview wanted prospective buyers to understand the growth potential and value of the business. They also wanted a team of experts who understood the importance of getting the process right first time and, given the commercial sensitivities, they wanted a business sale team on board who were not too entrenched in their sector. There was no margin for error and it was imperative that everyone was clear they had one shot at the divestiture process.

“From the outset it was apparent that we needed advisors with the necessary track record, technical understanding, network and capability to identify and approach a range of strategic acquirers both in the UK and overseas. My instinct was to use a corporate finance boutique rather than a larger practice and given our experience with Acuity this proved to be the right thing to do,” revealed co-founder Chris Wilde.

The approach

Acuity set out by using its experience and track record to garner the best possible outcome for Preview Services. They knew what was needed to get the job done; they knew when to empathise and when to chivvy. Crucially, they also utilised their extensive network in the UK and overseas to pinpoint and then approach potential buyers. The tenacity of the Acuity team and their geographical proximity to Preview were other plusses, as was the team of senior advisors that worked on the project from start to finish.

“Having worked on M&A (merger and acquisition) deals for the past 20 years, I had a very clear idea of what I needed in a corporate finance advisor. Based on my experience, I took the selection process seriously and met with a number of organisations several times. It was apparent from the outset that Acuity was the right choice. Acuity empathised with our business situation and understood what we were trying to achieve. As with any important decision we make as a business, we did our homework, including taking up references from other recent sellers and this only reinforced our decision to appoint them as our exclusive business intermediary,” added Chris Wilde.

Implementation and result

The Acuity team focused on producing compelling sales documentation, which portrayed all aspects of the business in easy-to-comprehend terms. They then researched and profiled prospective targets before approaching them, both directly and indirectly, through its extensive network both in the UK and overseas. Management meetings were set up and Preview’s management were mentored on how to handle themselves during the meetings to ensure they got the value proposition across well.

Chris Wilde explained: “If anybody is in any doubt about appointing a corporate advisor, they shouldn’t be. Selling your business is one of the most important events in a career and it is imperative that it is done correctly. Acuity was the perfect advisor for us. They ran a competitive divestiture process, which has yielded the very best outcome for both the company and its shareholders. Acuity found us the perfect acquisition partner, which was driven from their compelling marketing materials, diligent research and significant network. They supported us throughout the process and enabled us to work through a number of different options, always putting the best interests of Preview’s shareholders at heart.”

Seven different offers were procured and Acuity coached Preview through the decision-making process to reach an outcome that was the best for them and the business. Acuity also helped to recommend a legal team (Clarkslegal LLP www.clarkslegal.com) and assisted with due diligence.

An offer was accepted from Cintas Corporation to acquire the business in whole to support Cintas’ development of a pan-European document management business. Cintas had recently acquired (July 2010) a UK document storage business, Squirrel Storage.

A simple deal structure was agreed with the ability for the existing shareholders to share in the short-term future potential growth of the business.

“Having introduced us to Cintas, Acuity then went on to handle the sale process with focus and professionalism. As somebody who has divestiture experience, I found that Acuity exceeded my expectations and delivered a result, which would have been impossible to replicate without their involvement. I am very pleased with our choice of Acuity and would not hesitate to use them again,” concluded Chris Wilde.

Joe Fribourg, Cintas’ director of corporate development Europe, added: “Acuity Advisors played a pivotal role during our acquisition of Preview Services. Acuity presented Preview’s business very well and helped us to realise the strategic value it brings to Cintas. Acuity were professional throughout and managed the due diligence phase with skill and insight.”

Ashan Arif of Clarkslegal LLP stated: “Acuity introduced me to Preview and Clarkslegal represented them throughout their business sale process. It is very rare for a transaction of this nature to complete so quickly and smoothly and this is largely down to skill and forward thinking of the Acuity team. They are an impressive corporate finance advisory firm who are motivated to get the very best results for their clients – I have no hesitation in recommending their work and I look forward to working with them in the future.”

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