Project Summer

Titan Partners Corporate Finance to provide valuation advice, assistance with due diligence and strategic counsel on the financial and commercial elements of their acquisition.

TRANSACTION OVERVIEW

Our client, Arneg Oceania (Arneg) is an international leader in the design, manufacture and installation of refrigeration equipment for the retail sector. Arneg had identified a target acquisition of a commercial refrigeration installation business and had engaged with the target when they approached Titan Partners for corporate finance assistance.

TITAN PARTNER’S ADVICE & SOLUTIONS

Arneg engaged Titan Partners Corporate Finance to provide valuation advice, assistance with due diligence and strategic counsel on the financial and commercial elements of their acquisition. Following the initial valuation of the target acquisition Titan Partners prepared an offer and Term Sheet to acquire the target business below the bottom end of our valuation range. The Term Sheet agreed various favourable clauses including an earn-out structure, 20% purchase price retention and buyer advantageous warranty limitations to mitigate unknown risks.

AT A GLANCE

Challenges

The timeframe was blown out with COVID and other Australian natural disasters. Legal documentation from the vendors was not appropriate for the transaction and required significant structural amendments. Some of the terms agreed in the negotiation of the Term Sheet were renegotiated by the vendors immediately prior to execution of binding legal contracts.

Result

The acquisition was a resounding success. The target business had grown significantly throughout the COVID pandemic. The resulting purchase price paid was less than the profit earned by the target business in the financial year immediately prior to sale. The key risks were identified and mitigated through the final binding contract terms, and warranties & indemnities provided by the vendors.