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Leisure & Entertainment Promoter

A client who had built a successful leisure and entertainment business over a 10 year period, approached GPI to explore alternatives for the next phase of growth and expansion.

GPI undertook an extensive review to identify the options for achieving this goal. A Business Case was produced, which summarised the pro’s and con’s of the following options;

  • Sale of the business
  • Incur additional debt to fund growth
  • Partial Sale of the business or merger

A partial sale was identified as the preferred solution. It would allow the existing owner to access capital locked up in the business and free this up for expansion, provide synergies and access to opportunities and markets through the relationship with the new partner whilst and importantly allow the business to realise its growth potential whilst still allow the existing owner and management team to retain ownership of strategy and business development locally.

To maximise the potential for the partial sale, a plan was created to get the business in the best possible shape for the transaction. This included;

  • Maximise the number of staff on contracts
  • Ensure business, systems, accounting and reporting were all in good order
  • Tighten client contract terms
  • Ensure that all transaction reporting was accurate, easy to understand and conveyed the right messages
  • Identify and approach appropriate parties who would be open to discussions with a basis of sound governance

A preferred partner was identified and terms subsequently negotiated. The transaction was successful on a number of levels, including the following;

  • The acquiring company purchased 60% of the business with an option to buy the remaining 40% within a 3 year timeframe
  • The owner and existing employees retained a position with the acquiring company that allowed them the freedom to exercise creative control, set strategy and deliver on what had made them successful in the past
  • The acquiring company obtained a business that filled a gap in their service offering and enabled the new merged entity to maximise growth potential
  • The business owner realised a significant gain, selling the business for a better than expected EBIT multiple of 4 times (versus market average of 1-3 times)