And then there were two. Vantis’ purchase of all the share capital in Numerica last week saw the end of the consolidator triumvirate and the beginning of a new era with just two listed accountancy operators.
This deal may not be on the same scale as AOL’s acquisition of TimeWarner, but in its own way, and to those of us with a professional interest in these matters, it represents the latest intriguing episode in the consolidators’ battle for survival.
Absorbed by its smaller consolidator rival, and partly sold off to BDO Stoy Hayward, Numerica is effectively no more, after a deal that brings to an end a long period of difficulties for the consolidator.
And in that sense, Numerica had looked like a takeover target for some time. The real surprise is that Vantis made the move that sealed Numerica’s fate, and not one of the larger mid-tier firms. BDO, as is well known, walked away from a deal with Numerica some time ago, citing the complexities involved in the company’s particular problems.
The main players in this particular twist are Paul Jackson and Paul Ashton, Vantis’ chief executive and executive director, respectively. Ashton is the man in charge of supervising Vantis’ raison d’etre – or to put it another way, its mergers and acquisitions policy. That is, after all, what a consolidator does. He will have been at the forefront of negotiations and will carry responsibility for the deal that acquired Numerica’s share capital for £15m of Vantis shares, and then sold on three Numerica offices to BDO for £12m in cash.
That’s a neat deal and sees Vantis emerge with considerably more cash than was laid out, something CEO Jackson will no doubt be very pleased about. Accounts for the six months to October 2004 showed Vantis was carrying net debt of around £12m – a sum the BDO cash would settle very nicely. As long as Numerica shareholders don’t elect en masse to take cash instead of shares, of course.
But it should come as no surprise that Ashton and Jackson appear to have sealed a fabulous deal for Vantis. Both have extensive experience and Ashton is described by those who know him as ‘very stable and very able’.
Jackson has advised on flotations in a professional capacity and knows corporate finance inside out.
Jackson’s chief difficulty will now be integrating Numerica into the Vantis apparatus. That may prove an onerous task given that Numerica is much bigger than any of the other Vantis acquisitions.
There’s also the cultural problem of dealing with Numerica partners, who will have to adapt to being employees, and senior managers. This they will no doubt approach with some nervousness after an earlier, aborted attempt to do the same at Numerica.
That said, observers believe Jackson and Ashton are running the most promising of the consolidators. The key question will be how much time and effort will be needed to ensure this deal doesn’t turn sour.
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