Background
Core Business Solutions (CBS) is a leading compliance SaaS and services provider, helping businesses become and stay compliant with deep specialization in the ISO & CMMC frameworks. The company had gone through a sale process the year prior without expert advisors; the deal went sideways, causing deal fatigue and distractions that affected company performance.
Process
After HRC formally engaged with the incumbent buyer, the buyer became dissatisfied with findings made before HRC's involvement, primarily due to poor financial and operational reporting. This put pressure on the valuation already offered to CBS. Knowing HRC would run a tactical yet strategic process, the buyer understood that strategic acquirers would likely create competition, driving up the valuation. They withdrew early in the process.
Transaction Dynamics
Given HRC's deep expertise in compliance and cybersecurity, HRC had recently worked with the buyer who had attempted to acquire CBS in the previous year — demonstrating its tangible experience and network in the space. Not surprisingly, another unsolicited buyer had approached CBS in the current year and made an offer that was in the ballpark for the sellers. HRC strongly advised running a process while concurrently engaging with that buyer, which led CBS to conclude that this approach would maximize value with the least disruption.
Results
Despite the incumbent buyer bowing out, HRC generated strong interest after reaching out to ~100 parties, primarily strategic acquirers. While not a perfect fit for many, one emerged where the strategic stars aligned, resulting in a closed transaction with a 70% increase in valuation over the initial acquirer's bid. CBS was thrilled about the economic outcome and equally excited about the potential synergies of being part of LRQA, backed by Goldman Sachs.
Commentary
We were thrilled that the stakeholders of CBS trusted us enough to handle the "in-the-ballpark" opportunity while being aggressively proactive to ensure the best party was identified, and no money was left on the table.