HRC Increases Valuation by 70%

Background

Core Business Solutions (CBS) is a leading compliance SaaS and service providers, helping businesses become and stay compliant, with expertise in the ISO & CMMC frameworks. The Company went through a sale process in the year prior without using expert advisors and the deal ended up going sideways, causing deal fatigue and distractions which affected Company performance.

Process

After HRC formally began engaging with the incumbent buyer, the buyer became dissatisfied with the findings before HRC’s involvement, primarily due to poor financial and operational reporting. This put pressure on the valuation already offered to CBS. In addition, knowing that HRC would run a tactical yet strategic process, the buyer understood that strategic acquirers would likely create competition, driving up the valuation. This caused them to withdraw early in the process.

Transaction Dynamics

Given HRC’s deep expertise in the compliance and cybersecurity space, 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 had made an offer that was in the ballpark for the sellers of CBS. HRC strongly advised running a process while concurrently engaging with that buyer, which led CBS to conclude that this approach would increase the odds of maximizing value with the least headaches.

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 stars aligned from a strategic perspective, resulting in a closed transaction with a 70% increase in valuation over the initial acquirer’s bid. Not only was CBS thrilled about the economic outcome, but they were equally, if not more, excited about the potential synergies to be realized in being part of LRQA, backed by Goldman Sachs.

Commentary

We were thrilled that 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.