‘Efficient’ is the word commonly used to describe today's auction processes, with their regular inclusion of such phenomena as vendor due diligence and staple finance. Timeconsuming inconveniences such as trawling data and assembling debt syndicates are no longer top priority in the rush to do the deal.
In this high-octane environment, investors and shareholders appear increasingly prone to bouts of extreme restlessness when a sale shows signs of dragging its heels. Take the case of Misys. On July 25, the UK-based software provider's independent directors announced the company was opening its books to interested parties following the receipt of ‘indicative offers’.
At least four potential bidders were quickly identified: the incumbent management team led by CEO Kevin Lomax (and supported by Permira and General Atlantic); a team of three former Misys executives; Sungard Data Systems, the private equity-backed US software firm; and Fiserve, the US financial services IT business.
Shareholders waited in hungry anticipation of a deal. And waited a little longer. And then got impatient.
Following a release issued by Misys on 12 September, in which it said it had “not yet received any proposals which it considers should be put to shareholders”, frustration bubbled to the surface. One Misys investor quoted in The Observer newspaper raged: “Misys directors are playing with fire because, without a bid, the share price will crash. It's crazy because we hear bidders are offering just below what the company considers to be a fair price.” Offering some support to this investor's share price theory, Misys stock tumbled 8 percent on the day.
It transpired that shareholders were not the only ones getting fed up. On the same day as the Misys announcement, various media reports picked up the news that Sungard had walked away from the auction, though it wasn't clear exactly when this had happened.
However, there is still some good news for those hopeful of a sale. A recent analyst's note on Misys suggests: “Irrationally exuberant private equity liquidity looking for a job means that a deal is still the most likely scenario”. It's an eloquent sign of the times that even in today's most circumspect auctions, irrational exuberance is expected to be the winner in the end.
ADVENT SCORES PUBLIC RELATIONS HIT WITH FD SALE
Advent International, a global mid-market buyout firm, has sold Financial Dynamics, a public relations firm it has owned since 2003, for $260 million (€201 million). FTI Consulting, a US group, has paid the highest price for a financial PR firm ever, netting Advent a 500 percent return on its £8 million investment in the original £26 million buyout. Under Advent's ownership Financial Dynamics, based in London, grew through four significant acquisitions from 9 offices to 17, employing more than 450 people in Europe, the US, Asia, the Middle East and South Africa.
PE TRIO DIVEST MEDIMEDIA USA
Vestar Capital Partners has acquired MediMedia USA, a US healthcare marketing services and health management business, in a secondary buyout from Cinven, The Carlyle Group and Apax Partners. The Financial Times reported that MediMedia USA was sold for approximately €500 million ($635 million). The three private equity firms acquired MediMedia in April 2002 when it was the healthcare division of Aprovia, the former business publishing unit of Vivendi Universal Publishing in a €1.2 billion buyout. The consortium said MediMedia USA was the fourth disposal from the business and that total enterprise value from the divestments amounted to €1.1 billion.
FITCH SAYS FOCUS DEBT BURDEN ‘UNSUSTAINABLE’
Fitch Ratings, a credit ratings agency, has downgraded the mezzanine notes for Focus, a do-it-yourself business owned by private equity firms Duke Street Capital and Apax Partners. Focus has had its £100 million (€147 million) of mezzanine loans downgraded to CC. Pablo Mazzini, a director in Fitch's European leveraged finance team, said that, despite the business retaining a stable market share, the “run-rate trading EBITDA is making the current debt burden increasingly unsustainable.” As a result, said Fitch, a debt restructuring for Focus was “inevitable” in the foreseeable future.
3I AND STAR CAPITAL MAKE 50% IRR
3i, a global private equity firm, has sold SR Technics, a Swiss aeroplane maintenance company, to Mubadala Development Company of Abu Dhabi, Dubai Aerospace Enterprise and Istithmar, a Dubai-based private equity firm, in a €1 billion ($1.27 billion) transaction. Rothschild and Wyvern Partners were appointed as advisers on a dualtrack process involving the option of a possible flotation on the Swiss stock exchange as well as a sale. 3i said it made a 4.5 times money multiple and 50 percent IRR on its original investment in the €425 million management buyout of SR Technics alongside Star Capital Partners, a London-based private equity firm.