Background SME's client is a successful e-finance software and services provider dedicated to serving the United Kingdom & Ireland, Nordic, & Middle Eastern markets. The client approached SME and requested help for its management team to complete a buyout of the 'international business' from its parent company. SME's role as the sole advisor to the client during the MBO was secured by their expertise and demonstrated success within this area. Challenge No. 1 There were several issues that required immediate attention: - The ultimate parent company was based in Germany and listed on the Neurmark and Nasdaq; The Bond holders of this business had placed the company in formal administration under German law; The immediate parent was a wholly owned German unincorporated business which was not the subject of formal insolvency proceedings; The assets of the business together with the business itself were located in London, Stockholm and the Middle East. However, it was realised that other parts of the business in Germany, Austria and the USA also required consideration. In addition, SME were also faced with timing issues as it was the end of November and the Receiver in Germany wished to close the UK business at the end of December (inc. Christmas). This left only four weeks to secure funding from the UK venture capital market. The Solution First of all, SME coached the management team in producing information that was relevant for the investment community. It was also necessary to secure a deal with the Receiver and agree on the following terms: - Purchase prices for the list of company assets; Expectations of a sensible timetable consistent with their desire to maintain as many jobs as possible. By the second week in December the following were in place: - An investment memorandum; An agreed price with the Receiver, including a timetable extended to 31st January with all employees being paid until that date. During this timeframe, discussions were taking place to establish which assets really were available for purchase. Also, essential meetings were taking place in Stockholm and Stuttgart to ensure that a cohesive management unit was groomed and ready to be placed in front of any potential backer. Challenge No. 2 Within a six-week timescale that commenced towards the end of December and which also included both the Christmas and New Year holidays, 25 VCs were approached for the £3 million funding proposition. Whilst the story was compelling, obstacles SME faced from VCs included restricted timescales and a view that this was not a true MBO and had an element of "rescue nature" to it. The Solution A further 10 VCs were approached in the New Year and as expected, the New Year had brought with it a new enthusiasm for investment and a term sheet was reached with a VC who wanted to syndicate. However on the 31st January, another VC was found who produced a term sheet immediately but with even better terms. This was the VC's first investment and they demonstrated the vision necessary to move a potentially excellent business in a difficult, but advantageous, position as regards price to a speedy completion. The VC believed in the vision of the management and took external referencing on the software framework that had been developed. The deal went with the Receiver in Germany and as a result, a further extension was granted to the 28th February but on terms that if inward investment was successful, the Receiver would be reimbursed the payroll costs for February. The Result The deal was completed on 4th March, 2002 which covered: - The acquisition of the majority of the company's interests outside Germany and Central Europe including business infrastructures, intellectual property and rights to a range of new products. Inward investment of € 5.1 million. Freedom to carry on talking with other business units not yet sold. SME Accomplishments SME demonstrated continuing support and enthusiasm for the client and opportunity. As a result of their expertise, SME by far exceeded client expectations through its provision of excellent advice, strategic direction and professional approach and delivery of services. Examples of which included the search & selection of funding partners; presentational advice; insolvency awareness on the trading of individual subsidiaries; legal liaison; management team training and full project management.