Claritas Tax, Seneca Corporate Finance, DWF Law and Pannone Corporate also advised on the transaction.
Based in Warrington and boasting more than 30 years’ worth of experience, Inprova is a technology and data-enabled procurement firm with clients in the public, private and voluntary sectors. It uses a combination of technology, procurement analytics and category expertise to aid organisations in the enhancement of their procurement capabilities. Group chief executive Steven Malone led on the management buyout together with his senior team.
NVM Private Equity supported the MBO with a team led by investment partner Andy Leach. NVM’s investment is aimed at enabling Inprova to further build upon its technology platform and procurement analytics capabilities, developing its ability to provide valuable services to its customers. Key category areas to be expanded upon include responsive and planned maintenance, construction and capital works, building safety and net zero emissions. The transaction marks NVM’s third new investment of 2022 after its backing of YorkTest and Easby Group earlier this year.
Beyond Corporate’s team was led by partners Piers Dryden and Jim Truscott alongside Solicitor Shaun Little.
Lawyer Monthly had the pleasure to speak with Piers Dryden at Beyond Corporate to give us some further insight into this transaction:
Please tell us more about the transaction and the role that your team played within it.
We have acted for Inprova for some years now, and on this transaction we wore a couple of ’hats’. Primarily, we advised on the management buyout, assisting management on the terms of their investment into the group that acquired Inprova. We also supported the company itself and the selling shareholder regarding the due diligence exercise undertaken by NVM in relation to the company.
It was a busy transaction for us; we were reviewing draft shareholders’ agreements and articles of association, as well as advising on the way in which the management team would roll into the company moving forward and ensuring that the buyers had everything they needed to complete the deal.
What are the key considerations that you take into account when advising on an MBO?
The key considerations are, as always, making sure that our clients can achieve the economic return that they are expecting whilst managing their risk. Therefore we look at protecting their economic participation via things like anti-dilution mechanics, leaver provisions and reasonable limitations on management warranties.
The key considerations are, as always, making sure that our clients can achieve the economic return that they are expecting whilst managing their risk.
In MBOs, the management team is responsible for delivering the expected returns for the investor, so we also aim to ensure that they have sufficient control over the ongoing operation of the company whilst consulting with the investor on a reasonable range of reserved matters. We also look to ensure that the circumstances when the investor can intervene are proportionate. Our ultimate objective is to ensure that all participants in the company at the end of the investment cycle can participate fully based on the agreed deal.
Beyond these usual points, did you encounter any challenges during the transaction? If so, how did you overcome them?
We already had a very deep knowledge of the company itself and played a supporting role to the seller and the company in that regard whilst primarily focusing on advising and representing management in the deal. It was important to manage everyone’s expectations as to our specific role and the limits around it – in particular that we did not act for the seller.
It is also important to bear in mind that, when acting for management on an MBO, it is the investor which controls the timetable and it is important to be highly responsive.
Finally, management teams often have not undertaken similar transactions before, as was the case here. We were therefore keen to ensure that our clients had sufficient support and explanation of the process and the relevant documents. In addition, our clients were taking on a significant amount of responsibility and risk and, and in some cases, putting their own money into the deal. It was therefore very important we were sensitive to these pressures and ensured that they were comfortable with the whole process.
How did you work with the other firms involved in the transaction to ensure a positive outcome for all?
As well as working very closely with the management team, we also worked with DWF, who were acting for NVM, to negotiate the equity documents on behalf of the management team. We simultaneously worked with Pannone, who were acting for the seller, supporting them in their response to the investor’s due diligence requests and in their disclosure exercise in relation to the warranties given by the seller under the SPA.
We also liaised with Seneca and Claritas to ensure that the financial aspects of the transaction were accurately reflected in the legal documentation and that the client was therefore getting what they expected from the deal.
What do you expect the outcome of this investment will be for Inprova and the wider procurement space?
NVM’s investment is aimed at enabling Inprova to further build upon its technology platform and procurement analytics capabilities, which will ultimately develop its ability to expand their service capabilities. Key category areas to be expanded upon include responsive and planned maintenance, construction and capital works, building safety and net zero emissions.
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Would you say that your work on this transaction fits the profile of Beyond Corporate Law? In what ways is this the case?
Beyond Corporate’s specialist corporate team undertakes a large volume of work for sellers, founders, management teams and buyers of companies. Our broad experience of these deals was especially helpful in this deal because we understood the key priorities for the transaction for each party and were able to advise our client from the perspective of the otherinvolved parties.
Advising management is a sweet spot for the firm. Our team has advised on many MBO deals, helping our clients to agree on a balanced set of terms and give them the best chance of closing the deal, and this depth of experience was crucial in allowing us to keep track of the various elements of the transaction and get the deal done for the client in the timeframe required.
The focus for the Inprova deal was to ensure that the management team had the right participation on an ongoing basis, and that they got the right investment terms in the documents – proportionate to their participation in the company versus the investment made by NVM. The private equity side put a significant amount of money in, so they have the majority in terms of voting control and decision-making, but we wanted to ensure that the management team got the right protections as well and ultimately are now free to get on with the business of making the greatest success of Inprova that they can.
