Mergers & Acquisitions: An FD’s Role in a Trade Sale Transaction

Are mergers and acquisitions (M&As) an art or a science? In our recent article we gained insight from CFO Adam Fowler, off the back of his lead on multiple successful acquisitions with private equity investment. For this installment, Richard Dibden speaks to Doug Kettlewell, former Finance Director at Talley Group, following the company’s sale to Direct Healthcare Group (DHG).

In this article we explore Doug’s role as FD in this trade sale transaction; looking at the skills needed during this process and the lessons learnt, to hopefully provide useful insight for other FDs on the M&A road.

Talley Group were the UK’s largest privately-owned manufacturer of equipment for pressure ulcer prevention & treatment, compression therapy and Negative pressure wound therapy (NPWT). Based in Romsey, the third-generation family business formed in 1953 and have always been well-respected in the industry, supplying the NHS and private healthcare markets.

In March 2021 Direct Healthcare Group (DHG) acquired the company following a successful trade sale. Doug Kettlewell joined Talley Group in February 2020 as FD, and was instrumental in leading the company through this transaction process. Doug explains: “The decision was made in July 2020 to sell the business, it was a very tight time frame and was all done inside eight months.”

What was the FDs involvement in the M&A?

Working on behalf of the company’s shareholders, Doug’s involvement in the M&A process encompassed selecting the lawyers (Shoosmiths), and the Corporate Finance Advisors (RSM), and overseeing the entire sale process right through to completion.

In Doug’s words the process was a bit of a rollercoaster ride and there was a lot to do to keep the process moving. He expands on his responsibilities: “This included the co-ordination of the IM [Information Memorandum], providing the numbers to complete the model in readiness for due diligence, building/overseeing a comprehensive data room and answering a plethora of questions along the way.”

Challenges and skills needed

As with any process there were plenty of challenges for Doug as FD, not least catching Covid at a key part of the process! In addition, having only recently joined the business in Q1 of 2020, Doug found gathering information difficult – such as that needed for the data room.

At this point in time there were also other pressures on the business – at the same time as the sale process Talley Group was supplying the NHS (in Covid times), implementing a new ERP system and having teams working remotely – all of this presented a huge challenge and a significant business-learning curve for Doug.

With all this in play, his role required huge resilience, Doug adds: “A determination to succeed was a must – especially when faced with such a challenging timeframe.”

Strong communication with all stakeholders was an essential skill to demonstrate. Doug needed to have the ability to co-ordinate information across the business and manage a complex, emotive process – made more so due to family ownership.

At the end of the process all of the parties involved were very happy with the outcome. Doug says: “We were able to accelerate the process as all parties wanted the same result. Despite this fast pace it was an extremely thorough process with no stone unturned or question unanswered.”

As in most deals there were a few small compromises made, but it ended in success and the desired outcome.

Doug’s role has evolved since the transaction; in a slightly less usual scenario he has exited Talley Group alongside the co-owning brothers to focus together on other business interests. The successful sale meant Doug could concentrate fully on building TECcare, a smaller project and separate entity that was not part of the sale process.

There was, as to be expected a period of a TSA (Transition Service Agreement) following the sale, which was difficult for Doug to combine with the new day job: “Due to the prior link between Talley Group and TECcare, I have had to unwind things out of the SSC agreement, such as IT infrastructure.”

However once those hurdles were overcome there was opportunity to move forward with TECcare, a relative start-up business with huge potential – and Doug is excited for where the journey will take him.

So does Doug think M&A is indeed an Art or Science…?

“Definitely an art! But backed up by a lot of science” says Doug. “It can feel a regimented, prescriptive process and you will be asked a lot of questions and detail, a lot of which feels insignificant, but you can’t lose track of what you’re doing and the end goal.”

Advice to other FDs

So, what is Doug’s advice to other FDs on the road to a trade sale transaction?

• Start the data room now! Or at least as soon as you are considering a sale transaction. This was great advice from Shoosmiths, who along with RSM were fantastic throughout the process.

• Get the right team around you – both internally and externally. Having the right advisors on board and a strong, committed team really helped make this a positive and successful outcome for all involved.

• Ensure your third-party advisors are a good fit – similar to the point above you need to ensure you have a strong team and a personality fit is the key. Shoosmiths and RSM were excellent throughout; very professional but also showed a good sense of humour.

• Be prepared to do a lot of the work on your own from an internal company perspective, due to the level of secrecy regarding the transaction. Maintaining this is really difficult, especially when requesting information.

• Have confidence in your ability – you’re sure to hit a few bumps in the road, so fix it and move on!

• Don’t be frightened to seek assistance when required – the advisors are there to help.

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