Driving Strategic Exit in Consulting Businesses

Summary for CFOs

Our team supported management to overcome the challenges of rapid growth and fragmented data to deliver a successful majority sale to a leading US private equity investor. By consolidating financials and presenting them in a way that clearly shows the value drivers of the business, we enabled management to present a compelling equity story, maximise value, and achieve an exceptional return for shareholders.

What the Client Said

“I wanted to thank you for all your help, insight, professionalism, guidance, diligence, flexibility and hard work over the last few months on Project Diamond. I truly appreciate all you have done.” – CFO

“Thanks for all of your support through Diamond. I have said to the CFO several times that I think the collective efforts to present comparable and supportable data in the time frames was a great achievement.” – Palatine (PE Firm, M&A Lead)

“Was a great outcome and really good to work with you guys (and hugely additive to have you all involved!).” – Lazard (Investment Bank MD)

“It was great working together with you and the level of pragmatism from your team was exactly what the deal required given the tight timelines, so thank you for that. Hopefully one together of many more to come.” – Lazard (Investment Bank VP)

The Client’s Challenges

Following a period of rapid expansion through acquisitions, the client, a fast-growing ESG consultancy, faced several critical challenges:

• Disconnect between reporting and equity story: The business had never been analysed or presented through a divisional lens, which was essential for articulating the equity story and demonstrating the re-occurring nature of each of the business streams.
• Limited management capacity: The management team was already operating at full stretch, with limited bandwidth to support the demands of a complex, high-pressure transaction process to a tight timeline.
• Fragmented financial information: Multiple acquisitions had not been integrated into a consistent reporting format, making it difficult to present a unified and credible picture to potential investors.
• Inconsistent data: Existing data sources did not reconcile to each other, nor to the statutory accounts, risking credibility with potential bidders and likely to cause issues through the diligence process.
• Lack of business segmentation: Existing data sources did not reconcile to each other, nor to the statutory accounts, risking credibility with potential bidders and likely to cause issues through the diligence process.

These issues posed a direct threat to the success of the sale, with the risk of eroding buyer confidence, delaying the process, and undermining value realisation for shareholders. There was significant pressure on the finance function, who were also trying to manage the day to day finance operations as well as completing three acquisitions.

Our Solution

Historic Data Pack and Forecast Model

We performed a bottom up exercise to cleanse, transform and analyse the financial and operational data and present it on a consistent basis in a single, historic data pack that gave a “single version of the truth” which could be shared with diligence providers and 3rd parties. The data pack was also used as the basis for the forecast model, which demonstrated the key equity story messages and contained outputs for the Investment Memorandum. Our work included:

• Consolidated and cleansed historical data from across all material entities, resolving gaps with pragmatic solutions to ensure a complete historic track record on a proforma basis was available.
• Re-tagged and reclassified data to enable the data to be viewed through a new divisional lens, fully aligned with investor materials.
• Created a dynamic dataset allowing slicing by division, region, and customer, presenting a single version of the truth.
• Provided analytical challenge to ensure all numbers were accurate, supportable, and ready for scrutiny from diligence providers and 3rd parties.
• Demonstrated key equity story messages, in particular the high degree of recurring revenue and the ability to cross sell products to customers, which had not previously been quantified.
• Built a fully integrated 3-statement model (P&L, balance sheet, cash flow) to present management’s 3-year plan, including the pro forma impact of pipeline acquisitions.

Transaction Support

• Scaled the project team up and down to meet shifting demands, relieving pressure on management.
• Led initial bidder run-throughs of the data pack and model where we discerned to areas of focus from bidders and ensured management were well prepared for key discussions.
• Managed the end-to-end Financial Due Diligence process: Information Request List collation, data room uploads, and Q&A tracking and resolution.
• Acted as first-line contact for bidder queries, coordinating with management where needed.
• Reviewed balance sheet ledgers to identify debt-like items and exceptionals, supporting the working capital and locked box position ahead of completion.

The Impact

Successful majority sale: The company achieved a successful sale to the preferred bidder, achieving a 17x multiple and a 6x return on initial investment for the private equity sponsor.

Enhanced bandwidth and coordination: Our support added critical bandwidth to the management team and enabled seamless coordination across multiple M&A workstreams.

Credibility and confidence: The business was presented through a clear, supportable divisional lens, with investor materials fully aligned to the underlying data, building trust and confidence with bidders and advisors. The data presented clearly underpinned the sales narrative.