Case Study 4

Sale of Business with Minimal Profits or Tangible Assets

We were in contact with a software company which was making minimal profits and had very few tangible assets, however, they did have the intellectual property rights to the software that they had developed. Our client had a mixed Board, in that some wanted to remain with the business and some wished to leave the business. We secured a sale to a UK venture capitalist and a fully quoted USA public company. In a complex transaction, we enabled all the directors to take out a significant cash sum as well as each of the them achieving their own personal aspirations of either retiring or remaining with the new larger group.

Key deal points

• We identified a UK buyer and a USA buyer, one being a trade buyer and the other being a venture capitalist.
  
• Our retiring client received cash on completion whereas the clients staying with the business received cash as well as an earnout deal structure.
  
• Value can be extracted even where there is no operating profit and no tangible assets so long as the business has some form of intellectual property rights.

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