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Look at a partial sale
PETER CULLUM – EXECUTIVE CHAIRMAN,
✯
TOWERGATE PARTNERSHIP
It’s still a distressed market that will the biggest problems is that vendors are
recover in 2010, but not to the levels that finding it difficult to come to terms with
we saw in 2007. I suppose you’ve got to sit this and are still looking for EBITDA
back and really question the necessity of multiples that were prevalent in 2007. It is
doing a deal in 2009 because, by and large, a huge shock to vendors to suddenly find
illiquidity is a problem and it has become that their pension pot, which they had
a buyer’s market. been banking on, has suddenly halved –
Those contemplating an exit should have it’s painful.
“Those contemplating an exit should think about a partial sale.
Taking money off the table now and having a formulaic valuation
for two or three years’ time, gives vendors a degree of certainty”
a serious think about a partial sale rather In recent transactions, I have had to
than a final exit. Taking money off the compromise. The timing was right so I have
table now and having a formulaic valuation offered to buy a stake in the business and
for two or three years’ time, gives vendors create a formula that provides upside in the
a degree of certainty, but doesn’t lock future subject to performance.
them into what they may regard as a In this marketplace, vendors who want to
low-value deal. take money off the table have got to think
Over the last six to nine months, long and hard in terms of the timing, as to
valuations have fallen quite dramatically whether it’s going to be a partial sale or a
within the general insurance space. One of 100 per cent acquisition.
Mergers & Acquisitions 19
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