How PBO Advisory’s end-to-end strategic support enabled a local tech company to navigate a sale to a multi-billion-dollar, publicly-traded international buyer.
Introduction
When a San Diego-based technology company received an unsolicited offer from a Tokyo-based, publicly-traded corporation with over $2 billion in revenue, the opportunity was immense. However, as first-time sellers, the client needed an expert partner to navigate the complexities of an international transaction. PBO Advisory Group was initially retained to prepare the client for a future exit; however, this unexpected offer accelerated the timeline, requiring our team to guide them through every phase of the deal, from preparation to close and beyond.
The Challenge: Preparing for a High-Stakes International Transaction
The client faced a series of significant challenges that required immediate and expert intervention:
- Lack of Transaction Readiness: The company’s financials needed to be upgraded to full GAAP-compliance to withstand the intense scrutiny of a sophisticated international buyer and their advisors.
- Navigating the Unknown: As first-time sellers, the client needed education and counsel on the entire M&A process, from managing a virtual data room to understanding the cadence of due diligence.
- Complex Cross-Border Requirements: The deal involved navigating different financial standards (GAAP vs. IFRS), international tax implications, and communication across multiple time zones with the buyer’s headquarters in Tokyo.
- Intense Due Diligence: The process would require organizing and screening vast amounts of documents and responding to a high volume of requests from the buyer, their auditors, and their valuation teams.
The Solution: A Multi-Phase, Start-to-Finish Partnership
PBO Advisory provided comprehensive, hands-on support throughout the entire lifecycle of the transaction.
- Preparation Phase: Our first step was a financial reporting uplift project. This included upgrading the company’s financials to adhere to GAAP standards, redesigning the chart of accounts for better reporting, and developing a robust financial forecast model. Crucially, we counseled the client on what to expect during the exit process.
- Transaction Phase: Upon receiving the unsolicited offer, our team, working in conjunction with a capital advisory firm, analyzed the offer and forecasted the after-tax proceeds for the sellers. We then spearheaded the population of the virtual data room, managing a high volume of document requests. Our role expanded to include calculating the target net working capital and preparing the initial drafts of the stock purchase agreement disclosure schedules to support the legal team.
- Post-Sale Phase: Following a smooth deal closure, our work continued. We calculated the final net working capital, developed a new business plan in the buyer’s requested format, and led the implementation of International Financial Reporting Standards (IFRS) for all future reporting. We also integrated all reporting into the buyer’s templates and supported a third-party firm in valuing the opening balance sheet.
The Result: A Successful Sale and a New Client Relationship
Despite the intense timeline and complexity, the process was a resounding success, culminating in a smooth closing that achieved a fantastic outcome for the sellers. PBO’s extensive experience in acquisitions and domestic & foreign financial issues proved instrumental in navigating the transaction. The buyer was so impressed with PBO’s diligence and creative approach that they engaged our team for ongoing services, including financial planning and analysis, outsourced CFO services for their U.S. and U.K. operations, and outsourced HR for their U.S. operations. This engagement showcases PBO Advisory’s ability to act as a comprehensive partner, guiding clients through the most complex transactions and delivering results that foster trust and establish lasting relationships.
Your Partner in Strategic Transactions
Whether you are preparing for a future exit or responding to an unexpected offer, having an experienced advisory partner is critical. PBO Advisory provides the end-to-end financial guidance needed to navigate complex transactions and achieve your strategic goals.
Contact Us Today to learn how our advisory services can position your company for a successful transaction.
Learn More
