ICON act for AIM listed SaaS business, Atlantic Global Plc, on its sale to US based KeyedIn Solutions.
When a 20-year-old British software company developed cloud technology, a sale to genuine global players was the only way for worldwide expansion.
The time and effort as well as financial cost associated with delisting a company from the UK’s Alternative Investment Market (AIM) can be off putting, particularly in uncertain markets. The need to comply with Takeover Panel and London Stock Exchange requirements represents an additional layer of legal complexity as well as the cash expense.
A potential sale can come to a grinding halt before it has started. So a corporate finance adviser that works on a sale which sees 76% uplift in its client’s share price has something to shout about. ICON Corporate Finance advised Bradford-based Atlantic Global on its sale for £4.9m in February 2012, to KeyedIn Solutions of Minnesota at just such a healthy premium.
For ICON, the story has its origins in the summer of 2011 when Adrian Bradshaw, the chairman of Atlantic Global, approached ICON’s founder, Alan Bristow, with a view to selling the business.
Established in 1993, the company had a blue-chip client base, including Kingston Communications and Serco, for its core products – time sheet and project management, professional service automation and project portfolio management.
In 2006 Atlantic launched its Software-as-a-Service (SaaS) ‘OnDemand’ product and it became a specialist service provider in the rapidly growing cloud technology field. The business had potential, but management recognised it lacked the necessary selling skills. “Adrian was aware of our expertise in helping software companies raise finance and execute mergers and acquisitions, and wanted to commission a sales process,” says Bristow. “It was a classic approach. We met the chairman and his chief executive in July 2011, were appointed in September and set to work more or less immediately.
Completion took place in the following February, which in M&A terms is pretty slick.” Once appointed, ICON worked closely together with Atlantic to draw up a list of suitable potential strategic buyers, marketing the company on the full international stage.
Then, after the target list had been agreed, the serious work began of crystallising interest. There were expressions of interest from a European business, a UK private company, a Scandinavian company and a US west-coast company. Plus, of course, KeyedIn. Although three bidders were kept in the frame, KeyedIn was the “most preferable” in terms of price and crucially deliverability.
So what about KeyedIn? It is a start-up business looking to sell cloud-based technologies globally to SMEs. The team behind it are co-founders George and Lauri Klaus, who are chairman and CEO respectively. George Klaus was the CEO and Lauri Klaus the head of sales at Epicor, which was sold to Apax Partners a year ago. Under George Klaus’s 20 years of stewardship Epicor had increased in value from $30m to the $980m Apax paid for one of the largest global providers of software for enterprise resource planning.
“I think we can grow into a very large company quickly, largely because of all of our connections,” Lauri Klaus told the Star Tribune in the US. And there was no dragging feet. In December 2011 it opened its headquarters in Bloomington, Minnesota and in January it acquired Minneapolis-based Datacom, ahead of the Atlantic Global deal.
Rolling negotiations took place to come to a deal the Atlantic board could recommend to shareholders, in strict adherence to London Stock Exchange rules. “When selling a PLC you can’t grant exclusivity,” Bristow says. “It’s a very transparent process.” By 21 February this year they had more than 90% shareholder approval, and the Klauses made the trip to Bradford to celebrate their second acquisition in two months. He describes the premium achieved on the share price as a “superb outcome”.
Other important considerations taken into account included KeyedIn’s plans for Atlantic’s existing leadership, and future development of the company. KeyedIn gave a pledge to keep the business in Yorkshire and develop its global ambitions from there – in theory given it is cloud-based technology it should not matter where the business is based.
Committed to keeping the business in Yorkshire, significantly growing the team in the UK and to a major investment programme, KeyedIn is looking to sell Atlantic’s software worldwide – including in the global hotbed of information technology – Silicon Valley, California.
“We believe the product is capable of delivering much larger revenues than it has in the past,” says James Waterhouse, who now heads up the UK operation and had been VP of the EMEA region for Epicor in the three years prior to its sale. He says the company’s revenues of £1.4m can grow very quickly. “We plan to increase that six-fold, up to £8.5m,” he says. “Beyond that we want to develop the business into what we call a trading platform – a single business where you can run your entire business.”
Waterhouse sees Atlantic’s products as critical to the overall strategy of the group, whose mission he describes: “KeyedIn Solutions’ products bring a new flexibility to the enterprise software marketplace, replacing the ‘one size fits all’ approach. We are offering agile, cloud-based Software-as-a-Service (SaaS) solutions that can be implemented by a wide range of businesses – from SMEs to larger enterprises – as and when they’re needed, quickly delivering value.”
The Atlantic founder and former CEO, Eugene Blaine, has stayed on board as head of technology for the group. He rolled over a small element of the consideration he received for his Atlantic shares as shares in the enlarged entity – possibly a simple decision given the management team’s track record and stated ambition. Lauri Klaus saw the deal as a good match: “In terms of the complementary skills of both organisations, the stage that the company had reached in the business cycle and the
products it has developed, it’s a perfect fit.”
And for Waterhouse there was a determination to acquire Atlantic: “We were working blind a lot of the time. We didn’t know who we were bidding against and it was just a matter of velocity that got us through that.”
Minnesota-based KeyedIn Solutions bought UK AIM-listed Atlantic Global, a developer of what Atlantic describes as ‘world-based, cloud-based Software-as-a- Service solutions’. The US company paid £4.9m in cash upon completion, in February 2012. ICON Corporate Finance advised Atlantic, while Daniel Stewart carried out its duties as the company’s stockbroker and Nomad (nominated adviser). Alan Fletcher of Capital One provided the legal advice to Atlantic. Law firm Pinsent Mason provided a legal advice to KeyedIn, who looked after their own corporate finance requirements.
This case study first appeared in Corporate Financier magazine