Unlocked: Managing deals remotely
We may have been locked down, but long-term relationships meant we weren’t locked out. Inflexion has announced a new investment, an exit and six add-ons to its portfolio during Q2.
“Can you hear me?” So began many conversations during April, May and June 2020 as lockdown necessitated sudden and long-term remote working for most of the world, and many office workers were forced to rely on technologies previously unknown to them to communicate.
Alongside focusing on our portfolio, we continued to look at new opportunities. One of these was with liquid pharmaceuticals business Rosemont, whose management we had been able to get to know prior to lockdown. Mass Zoom calls, which may have been insufficient to gain comfort on their own, effectively supplemented the rapport we had already built with the team. These kept the discussions going, while one-to-one calls were extremely useful to maintain the personal touch and to iron out any potentially tricky issues. “Our relationship building really paid off, management already felt they knew us and could trust us, and we knew the firm well enough to have a strong angle on how to accelerate its growth,” says Ben Long, Inflexion Partner focused on healthcare.
And relationships with lenders were also key. All debt to support the deal was raised virtually, including presentations with lenders with whom Inflexion has worked with for many years.
The transaction was finally signed in June, carving the business out from its NYSE-listed parent Perrigo. With Inflexion’s backing, Rosemont plans to increase product development and expand geographically, as part of the strategy agreed by management and Inflexion during lockdown.
Smooth operators: Glide
During lockdown we also continued discussions with US infrastructure investor Alinda Capital around the sale of Glide. The sale was agreed despite fewer face-to-face meetings than would usually be expected. A formal process was launched in January, with around two dozen meetings held during the second half of January. The second round commenced in April and was wholly conducted by video conference, including due diligence and buyer Q&A. “Post lockdown there were no face-to-face management interactions until five days before closure, however they actually spent more time with management than they normally would via MS Teams, and in fact the talks may have progressed more swiftly as travel time did not have to be scheduled,” recalls Glide Chair Peter Manning.
Post lockdown there were no face-to-face management interactions until five days before closure, however they actually spent more time with management than they normally would via MS Teams, and in fact the talks may have progressed more swiftly as travel time did not have to be scheduled.
Though the shock of the pandemic clearly rattled markets, our pre-marketing of the business created sufficient familiarity with the asset. “The business was very attractive to prospective buyers owing to the critical nature of Glide’s connectivity offering, which had just become even more pertinent,” explains Peter. This, combined with the firm’s high-quality and visible earnings, meant second-round bids at the end of April did not chip at the price.
“While it is true that a lot of transactions have been put on hold or cancelled altogether, our pre-process planning as well as Glide hitting its targets throughout the pandemic gave potential buyers comfort that our earnings were strong,” Peter says. “We also continued to invest heavily into our national infrastructure throughout the pandemic, demonstrating network efficiencies which gave bidders further confidence by seeing our own faith in what could still be achieved,” he adds.
With M&A a key pillar of Inflexion’s growth creation toolkit, we already had a number of discussions underway with management teams. Six of these signed in Q2, including two for Alcumus. This firm is very au fait with acquisitive growth, having undertaken two strategic transactions with our support since our 2015 buyout. Most recently, the firm announced the purchase of ContractorCheck in Canada and Banyard Solutions of the UK at the end of June.
To have undertaken not one but two during this time of uncertainty says a lot – about the robustness of Alcumus as well as conviction in the opportunities. “Inflexion trust us as a team. They allow us to go for what we believe in, even in this climate,” explains Tim Jackson, CFO of Alcumus. “It’s an incredible level of support, not just financially but also the emotional backing. Even before we look at numbers, they empower us to go with our instinct; they’ve never said no to us.”
Inflexion trust us as a team. They allow us to go for what we believe in, even in this climate. It’s an incredible level of support, not just financially but also the emotional backing.
Alcumus begun discussions with ContractorCheck at the start of December whilst talks with Banyard didn’t start until the end of February, by which point Tim concedes “coronavirus was already lurking” and so negotiations were done mostly over MS Teams. Terms for that deal were signed at the end of March – but neither Banyard nor ContractorCheck were to close for some time.
“We could have completed earlier but we deliberately went slowly to ensure they’d emerge from this period just as strong, checking in with management very regularly. We were open and up-front with the vendors, saying if your business is negatively impacted, it will affect our price,” Tim explains.
It’s clear that for all types of transactions, relationships matter – and in times of uncertainty, they can provide trust and familiarity. For this reason, we continue to nurture our valued Network as we seek out fresh opportunities to provide our flexible funding to ambitious management teams.