The current M&A deals we are running demonstrate the value of trusted trading relationships between buyers and sellers. An existing relationship builds trust and confidence, and may lead to an offer being made if integration supports the long term strategic growth plans of the buyer. Buyers with established finance is also critical as it avoids the need to put in place new acquisition finance, which can be a cause of delay.
Accordance are a Brighton business, started by Bart O’Toole in 2006, to provide quality VAT managed services to European companies. Accordance are part of the new wave of fast growing, highly skilled professional and technical businesses established in Brighton. Staff are drawn by the City as a place to live, proximity to London, and the lifestyle on offer.
The buyer of Accordance was Sovos, Compliance LLC, a global private equity backed software supplier to Accordance, so the businesses know each other well. The deal was completed with no reduction in the headline price, some 8 weeks after the heads of terms were signed. Like most deals which complete quickly and with no reduction in price, preparation was the key, in this case over several years.
Since the Company’s foundation, Bart, with his business partners Nick Hallam and David Stokes has built a quality team of professionals, operating from offices near the Station in Brighton.
DMH Stallard have worked with the Accordance team for some years, working alongside RSM Corporate Finance and tax teams over the last five years to prepare the business for sale. In that time various approaches were considered and rejected, including trade buyers and private equity investors. At a key stage along this path, Bart, Nick and David recognised that they could take the business through it’s next stage of growth, increasing the value of the business as they did so. New offices, investment in a management team and quality people, and a generous Share Option plan for senior staff, saw the business grow fast ahead of the sale. Critically, trading held up during lockdown.
Accordance has been a Sovos partner since 2018 and has implemented Sovos VAT Reporting software to provide technology-enabled compliance services to its clients. The acquisition comes at a critical moment for VAT countries, where businesses face a range of new regulatory mandates, from changes in periodic reporting to continuous transaction controls (CTCs) and allows Sovos to build it’s business in Europe. All of these factors came together to create a business case for the deal.
In terms of the ability of a deal team to deliver a deal efficiently during lock down, settled relationships and experience built over years was key; legal, financial, tax and strategy teams all knew each other well. Regular reviews had taken place in the years before sale, to update documents and systems. Potential risk areas, which might have impacted value for the Sellers, could be recognised early and dealt with ahead of an offer being received.
Robust on line data rooms facilitate remote transaction processes; in this case DMH Stallard and RSM were ready to move as soon as deal terms were confirmed. If selection of the professional advisory team had commenced when an offer was received, the deal would have more than doubled in terms of timetable.
In any deal, judgement calls and risk assessment is required; trust established over time between corporate finance advisors, lawyers and clients makes this process much more efficient. In this case those relationships had been built over years; deals had been considered and rejected, valuations considered and reflected upon, and investment in quality people made. Without all these factors coming together a deal would have been much harder to achieve.
On closing the deal Andy Hovanick, CEO of Sovos said “Accordance adds a leading service provider with a robust customer base and unique VAT expertise to our growing European organization, strengthening the foundation for future global expansion. With this acquisition, Sovos substantially increases our operations in Europe, where we already enjoy significant scale with more than 2,000 customers being served in the region.”
Sovos is owned by Hg, the London- based specialist private equity investor focused on software and service businesses. The sale does not mark an end to the Accordance story in Brighton, rather the commencement of a new stage in the growth of a successful Brighton business, marking a transition from entrepreneurial business to corporate ownership. The continuation of the existing management team should ensure a smooth transition and an exciting future.
Jonathan Grant who led the transaction for DMH Stallard said “ This is a quality deal for a fast growing Brighton business, completed in the middle of lockdown. DMH Stallard have worked with Accordance since it was founded; this deal shows the value of a strong advisory team, and an investment by owners in building a strong culture and quality management team”.