Our client is a group of business investors from seven different countries who are shareholders (at various levels) in technology and engineering companies located in the Middle East & North Africa region, South Asia, the United Kingdom, and the United States. They wanted to amalgamate their interests into a business group for greater financial strength than each could achieve individually. Forming a group would bring better access to debt and equity financing for growth and international expansion.
Some group members had developed software used in defence and other sensitive sectors and have Intellectual Property (IP) rights to this software. Others had developed sales platforms for the IP in other countries; developed businesses based on hardware agencies that complemented the IP; and developed unrelated engineering infrastructure businesses.
Our client asked us to assess the feasibility of such an amalgamation and to analyze the processes and changes necessary to complete the exercise.
Arch helped the client select a new parent company from various jurisdictions to head the new group. We assessed taxation implications for the group and for the individual investors. We assessed political risk, sound legal jurisdiction, political sensitivity in sale to restricted sectors, and the suitability for securing financing—including a future IPO; the commercial costs of operation; and the transfer of ownership to complete the amalgamation.
We made certain that the new parent company’s format was acceptable for the main IPO and debt markets. We compiled acceptable valuations of each entity to support the new parent company shareholding, and amalgamated the group by acquisition of the various entities by the parent company. We also adopted executive incentive schemes and service contract terms that would attract the staff needed to expand and develop the IP and be acceptable to any future IPO financing.
Arch helped the client build a business plan and adopt a level of governance and stewardship that made the group acceptable to prospective debt and equity investors. We also helped them prepare and formalise a number of pre-IPO private equity bridge financings.