How to get the best deal exiting…
PETER Jones cashed in on his Wireless Logic investment this week, pocketing a whopping £38m. This is the third telecoms business he has sold in the last year, totting up over £100m in the process. He’s after a “war chest” that will buy him a mega-retail brand to turn around. Just how does he do it? He’s clearly in a rush to sell, but is still getting fantastic deals. We asked him to spill the beans.
1. GET COMPETITION GOING
“Don’t sell unless you have more than one person bidding,” says Jones. “You’ve got to make sure there is hot competition.” Jones had plenty of offers for Wireless Logic. “We had someone waiting in the wings in case ECI tried to drop the price.”
2. DRAW UP A TEASER
Once you’ve got this going, you need top quality brochures and excellent information about the company, he explains. “You need to get people excited about your business, the brochure is a teaser, targeting the type of people that are interested.”
3. USE STRUCTURED BIDDING
Then you need to introduce a very structured bidding process. “You need a period for due diligence, a set closing date for offers, and most importantly agree a ‘lock down’ period before you grant exclusivity.” Otherwise, he warns, buyers will hang about, waiting for the competition to fall off the radar, and then claim their due diligence teams discovered something that requires them to lower the offer.
4. GET LEGAL HELP
Always get top-notch lawyers. “You will be surprised how much forms and paper work is necessary. It sounds cliche but the devil is in the detail.” Jones used Osborne Clark for the sale of Wireless Logic.
5. DO YOUR RESEARCH
“There’s no substitute for having gone through the process a few times and learning from getting stung,” he cautions. Jones recommends that you speak to people that have been through the process before. Failing that, there’s lots of information on the internet.
DEAL HISTORY | THE DETAILS
Company profile: Wireless Logic is an independent machine-to-machine (M2M) communications specialist, with 3,600 customers and over 500,000 SIMS under management.
Buyer profile: ECI Partners, a UK mid-market private equity firm.
Jones’s purchase: £250,000 in 2002
Jones’s sale price: £38m
Jones’s sector history: This is the third telecoms business that Jones has sold in the last year. In the last twelve months alone he has sold various telecoms interests for almost £100m. In July last year he sold SIM reseller DSNS, which was a division of Data Select, his distribution company, and his IT services business PJ Media for a total consideration of £49m to Expansys.
Why: “I’m building a war chest because I want to buy a really big retail brand and turn it around.”