PIFC Consulting
Transaction Background
Graphite Capital originally invested in PIFC in 1998, providing development capital in return for a minority shareholding. In July 2002 we led the £17 million management buy-out of PIFC from its founding shareholder, who wished to realise his shareholding and step back from managing the business. Graphite backed the sales director to undertake the MBO. The founder was keen to retain exposure to PIFC's ongoing growth potential and rolled over a small part of his proceeds for a minority shareholding in the buy-out structure, and remained involved as a non-executive director.
Deal Attractions
PIFC had a history of strong growth and profitability in a cyclical market. The company had a very attractive base of recurring revenues from its existing business and clients. PIFC stood to gain from market changes, notably the replacement of defined benefit pensions schemes with defined contribution/group personal pension schemes. The business had outgrown its entrepreneurial origins and was set to develop further through new leadership and a more structured operational model.
Achievements
- our original investment provided development capital and strategic support which enabled the business to make an acquisition and grow rapidly
- profit more than trebled in the three years following the transaction
- after the buy-out the company implemented significant business process and cultural changes to enable it to pursue its next growth phase
- the range of services offered to clients was substantially broadened and adapted to the rapidly evolving market environment
- the business was a market leader in changing its model from commission income to fee income
Exit
- the business was sold to a subsidiary of AXA UK in August 2007
- the exit was a successful outcome for Graphite and PIFC's management team
- PIFC was an attractive target for AXA which was looking to increase its direct distribution capability into corporate clients