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| Client Profile: |
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Transaction Software Technologies, Inc. ("TST") was a rapidly growing software technology and implementation firm providing a suite of software tools to sophisticated "money center" banking clients. |
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| Background: |
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TST was facing a number of challenges. Originally a contract programming company, TST needed outside capital to complete a transition to a software product company. TST was facing the loss of key personnel to firms that were public and offered stock options. Its bank clients were merging, so individual projects were increasing in size and duration. Finally, one of its primary shareholders sought retirement because of health issues. TST needed to raise capital and consider capital change transactions that would increase its size and provide employees with stock option incentives. |
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| MASI Solution: |
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MASI worked with TST management to develop a funding strategy and entered into discussions with prospective merger partners and acquisition candidates. With management's participation MASI approached a number of mezzanine capital sources and negotiated with a number of prospective purchasers. |
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| Successes: |
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Capital funding in the form of a subordinated note with an attached warrant was raised to fund TST's business plan at an attractive valuation. Subsequently, the subordinated note holder, a large German software company, proposed to purchase 100% of TST's stock. After the German company had proposed a stock for stock transaction, a cash purchase price in excess of four times total TST revenues for the prior twelve months was negotiated. This solution provided primary shareholders with liquidity, employees with stock options in a public growth company and allowed TST to market its software to larger financial institutions. |
| Client Profile: |
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Argus Press ("Argus") was a high quality, progressive sheet-fed printer with annual revenues of approximately $25 million. Argus had been a very successful printer in the very competitive Midwest print market. |
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| Background: |
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The controlling shareholders of Argus had decided that Argus needed additional capital resources to continue its growth and challenge its loyal employees. The shareholders did not have all of the capital resources they deemed necessary to continue to fund the company's growth. At the same time, certain shareholders desired to create liquidity in their Argus holdings. |
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| MASI Solution: |
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With participation from Argus' accounting firm and legal counsel, MASI developed a multi-tiered strategy that tested the market for potential growth funding providers and at the same time quietly tested interest in a "change of control" transaction with certain strategic acquirers. This process resulted in the Argus shareholders electing to pursue a strategic "change of control" transaction. |
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| Successes: |
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The MASI marketing solution stratified the buyers by a number of characteristics including growth possibilities for the employees and the probable opportunities to maximize shareholder values. As a result, the negotiation processes involved a limited number of potential bidders. This limited the time commitment of key Argus employees and their detraction from operating the business. The successful strategic acquirer provided a transaction for the purchase of Argus' stock for significant cash, consulting contracts, and notes with attached warrants. The enterprise valuation of Argus was in excess of 6.7 times EBITDA at a time that prevailing industry transaction multiples were 5 times or less. |
| Client Profile: |
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First Chicago Equity Capital, now Banc One Venture Partners ("BVP"), is a Chicago-based private equity fund affiliated with First National Bank of Chicago, now a unit of Bank One. BVP has a long history of investing with management teams that have demonstrated an ability to build and grow successful business in niche markets. |
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| Background: |
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Working with an M&A International affiliate, MASI identified and met with the management of General Time whose well-known brand names of clocks include Seth Thomas, Westclock, and Spartus. Several years earlier, the management acquired control through a management buyout. Now senior members of management desired a liquidity event for part of their investment, but desired to stay and continue to grow the business. |
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| MASI Solution: |
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Working with BVP, MASI assisted in the negotiation and structuring of a leveraged recapitalization plan for General Time. Because of issues that carried over from the earlier management buyout, the process took over a year to complete. During this time it was extremely important that the management team stay focused on the business and not the recapitalization transaction. |
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| Successes: |
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At completion, BVP provided additional growth capital and the management team liquidity in their investment and provided a vehicle for the management team to continue to realize appreciated value from their investment in General Time. |
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