Divestment

Data_security

Case Study: Divestment


Lit-Support-250px

LitSupport Acquired for upto $30 Million

Background

LitSupport is one of Australia’s most reputable legal support and data management discovery firms.

As a private, family-owned business, LitSupport had experienced record success in recent years – with substantial potential for continued growth.

Opportunity

With many years’ experience and a strong network in the records management industry, Kennedy Needham was aware of several listed businesses interested in acquiring niche service lines.

Kennedy Needham approached LitSupport with a proposal to search for a suitable acquirer and to sell on their behalf. We presented a number of scenarios which would allow the owners to de-risk their position today and to realise the business’ true growth potential.

Upon learning of the potential sale value of their business, the owners of LitSupport decided they were ready to enter a new stage of life. They engaged Kennedy Needham to proceed.

Approach

Kennedy Needham identified Freightways - an international listed company on the New Zealand stock exchange - as potential acquirer of LitSupport.

With a strong strategic fit and suite of complementary services, Kennedy Needham knew that Freightways would be excited about the acquisition opportunity. And as anticipated, negotiations were entered into immediately.

Outcome

  • The purchase price for LitSupport was an initial payment of A$17.1 million and a potential earnout payment of up to A$12.9 million.
  • The owners of LitSupport received a significant portion upfront, with subsequent instalments to be paid over time.
  • The owners are still working in the business and will continue to do so for the next few years to support its continued growth.
Key learnings

  • Negotiating with and selling to a public company is a complex exercise. A high level of experience and service is required to ensure a smooth and successful transaction. It is no place for beginners.
  • A strong management team and business plan are key ingredients when marketing a business to prospective buyers.
  • Future growth potential is key to determining and communicating the true value of a business. If your business has blue sky and growth on the horizon, you will strengthen your negotiating position and ultimately, your sale price.