Global private equity firm Advent International has reached agreement with struggling business services group Cordiant Communications over the terms of a £26m management buyout of Financial Dynamics, Cordiant’s global public relations consultancy.
The transaction represents the final step in Cordiant’s plan to reduce debt through a programme of non-core asset disposals. Proceeds from the deal will be applied to repay borrowings. Cordiant itself has been the subject of takeover reports, with global advertising agency WPP currently leading the way with a £266m offer the business.
Financial Dynamics advises 400 clients worldwide and has offices across Europe, the US and the Middle East. Services include financial PR, investor relations and crisis and issues management.
The firm advises a number of European private equity houses, including CDC Capital Partners, Terra Firma Capital Partners and Barclays Capital.
Financial Dynamics was founded in 1986 by Tony Knox, who will continue as chairman following the MBO. In the year ended 31 December 2002, FD International generated revenue of £33.9m and profit before tax of £3.7m. Net assets attributable to FD International as at 31 December 2002 were £6.6m.
“The fact that [Financial Dynamics] has continued to generate growth and strengthen its market position in an economic downturn is testimony to its entrepreneurial management team and to the quality, breadth and unique structure of the business,” said John Singer, an Advent managing director who will join Financial Dynamics’ board.
In a statement, Advent said that FD would “consolidate and expand its service offerings in all its key markets, explore new product areas and make selective acquisitions and investments to expand the company’s geographic coverage.” On completion of the MBO, FD’s current employees are expected to own over 40 per cent of the shares of the business.
The transaction is the fifth announced by Advent since the beginning of May, when the firm and its local affiliate Turkven partnered to buy leading Turkish baker Unmas. In May firm also agreed to pay £255m for Aviagen Group, the world’s largest chicken breeder, from BC Partners, and acquired Danubius Radio in Hungary for E30m.
In June, the firm completed the sale of its Spanish pharmaceutical manufacturer through two transactions with trade buyers in Croatia and Italy. An effort to acquire BTC, the Bulgarian state-owned telecom company, remains ongoing despite several recent setbacks.
Debt finance for the FD transaction was provided by AIB. Advent International was advised by KPMG (financial due diligence), PwC (market due diligence) and Lovells. FD was advised by Ashurst Morris Crisp.