CASE STUDIES
Learn about some of the key projects we have worked on, helping our clients capitalize on opportunities and achieve success.
HEALTHCARE SOLUTIONS ACQUISITION
BACKGROUND
Clariti was approached by an executive with an idea – he wanted to acquire and turn around a healthcare solutions business that was not being optimally managed.
SITUATION ANALYSIS
While growth had tailed off, the business was not for sale. In addition, the executive needed access to the funds that would be required to acquire the business if it were for sale.
SERVICES PROVIDED
- Advised and coached the executive on how to position himself with the vendor
- Successfully positioned the executive as the buyer of choice
- Valued the business as a stand-alone proposition compared with the value that could be achieved under the executive’s vision
- Created a presentation showing the state of the business and the opportunity for value creation represented through an acquisition
- Ran a process to identify the optimal equity investors to invest alongside the executive
- Also sourced the debt capital to fund part of the purchase price; negotiated debt terms
- Approached the vendor with an unsolicited proposal and negotiated the purchase through a very tight process
RESULTS
- Target debt was re-financed with new debt that represented over 50% of the purchase price
- Syndicate of optimal equity investors was selected to invest alongside the executive
- Appropriate governance regime was put in place
- Business was acquired for an attractive valuation
- On to growing the business!
INSOLVENCY RESCUE
BACKGROUND
Client had an exceptional high-growth business model but a vastly over-levered balance sheet. Three series of secured debt were in payment default.
SITUATION ANALYSIS
The only alternative to an insolvency was a negotiated restructuring where lenders (both institutional and retail) would provide relief and compromise and term out their debt in exchange for equity.
SERVICES PROVIDED
- Performed a bottom up analysis of the prospects of the business with a restructured balance sheet
- Supervised the preparation of a detailed revised business and financial model and forecast
- Prepared valuation analyses under different scenarios
- Prepared a series of detailed presentations for discussion with the lenders
- Conducted all discussions with the lenders
- Drafted the agreement in principle for a negotiated restructuring
- Successfully negotiated the restructuring
RESULTS
- External secured debt consolidated into one class
- Face amount of secured debt reduced by 65%
- Debt termed out at 4.5 years, with a two-year interest holiday
- Debt holders would receive ~ 25% of the equity of the company pro forma
- Company’s shares traded up 37.5% the day after the announcement, and are up over 200% less than a year later
IoT COMPANY REINVENTION
BACKGROUND
Client had two main businesses: Wireless Cards and “Internet of Things” Solutions. The wireless card business was a strong contributor to the client’s cash flow and profit; the IoT business had strong growth prospects and needed investment capital.
SITUATION ANALYSIS
The correct strategic direction was to monetize the card business and invest the proceeds in the growth and optimization of the IoT business.
SERVICES PROVIDED
- Advised the client on the complex carve-out of the wireless card business and the cash sale of that business to a strategic cross-border buyer
- Advised the client on the likely market reaction to and acceptance of the resulting IoT “pure play” company, which had strong growth prospects
RESULTS
- Client emerged from the process as a “pure play” connected device company, providing integrated solutions for connectivity within the “Internet of Things”
- Funds from the sale of the wireless card division provided significant resources and capacity for accelerated growth in the retained business
- Since the announcement, the client’s shares have traded up to a high of more than 7x the pre-announcement price
PROXY BATTLE RESPONSE
BACKGROUND
Given a significantly undervalued share price, client’s board kicked off a strategic review process to enhance shareholder value. An activist shareholder had taken a position in the company and had requisitioned a meeting of shareholders to force a vote to replace several board members. The board struck a special committee of independent directors, charged with considering how best to maximize value and recognize the company’s current value and future prospects.
SITUATION ANALYSIS
The two main options available to enhance value were to engage in a strategic sale at a strong premium to the prevailing share price, or to defend against the activist shareholder and convince the market and shareholder base that the best path to value maximization was an enhanced “go-it-alone” strategy.
SERVICES PROVIDED
- Advised the board and the special committee on the strategic alternatives available, and the most effective path to maximizing value
- Ran a process resulting in a value maximizing sale of the company to a strategic cross-border buyer for cash
RESULTS
- Buyout offer represented a premium of 65% to the company’s closing share price the day before the announcement, and a premium of 96% to the unaffected price prior to the publicly disclosed activist shareholder requisition
STRATEGIC CROSS-BORDER DEAL
BACKGROUND
Client was a fertilizer and chemicals company based in India. It wanted to acquire an interest in a pre-production phosphate operation in South America. An auction was being run by the sellers of the interest.
SITUATION ANALYSIS
The client required advice on how to maximize its chance of success, and on deal valuation, negotiation and structure.
SERVICES PROVIDED
- Advised the client to approach the sellers in partnership with a Japanese partner
- Advised the client on: due diligence, deal structuring, risk containment, negotiation and valuation
- Conducted negotiations on behalf of the partnership
RESULTS
- Client, together with the Japanese partner, successfully acquired a 30% interest in the project, and entered into a long term “take-or-pay” phosphate offtake arrangement valued at the time in the hundreds of millions of dollars