Castor & Pollux is a digital communications consulting group that assists clients in designing and implementing their brand strategy. The firm has developed its offering significantly since its founding in 2010, with organic growth and significant contracts having allow it to diversify its offer around new entities such as a production studio and an expert placement agency. The firm now advises larger French firms as well as SMEs with its team of around 65 employees.
With over €5 billion in assets under management, Omnes is a major player in private equity and infrastructure, providing companies with the necessary equity for expansion and development. Its joint operation with Castor & Pollux will be structured through mezzanine financing and a capital injection that will allow its management team to become the company’s first group of shareholders.
DDA & Co advised Castor & Pollux with a team consisting of partner Alain Sitbon and associate Florian Charrière. Castor & Pollux also appointed legal firm Ollyns and Cabinet Paoluzzo.
Lawyer Monthly had the pleasure to speak with Alain Sitbon at DDA & Co to give us some further insight into this transaction:
Can you tell us more about the role that you played in this operation?
DDA & Company was engaged as financial advisors to the Castor & Pollux founders, representing around 80% of the company’s equity. Together, the two founders wanted to exit the business and move on to new entrepreneurial projects. Luckily, they had anticipated this move a few of years ahead and had set up a solid management team.
DDA’s role was then to embrace everyone’s objectives, including the founders, the managers and the rest of the team (65 professionals) within Castor & Pollux and to organise the smoothest possible transaction, keeping C&P’s DNA and development dynamics intact.
What is most important to keep in mind when working on a restructuring of this scale?
People, people and people! Communication agencies are a ’people business‘, probably more so than in most other industries. Therefore, it is crucial to pick up and accommodate everyone’s aspirations, not only those of the main shareholders. This requires careful attention and a good understanding of the management who will continue the company’s journey. The sellers must agree with that. That was the case at Castor & Pollux.
How did you work with the other firms and legal counsel involved to ensure the operation’s success?
The transaction was structured as a management buyout, which all parties ultimately chose over a sale to an external trade buyer – which would have been a larger corporation in the communication business. Such a transaction includes many legal issues in connection with the financing, shareholders’ agreement, governance, exit horizon etc.
Communication agencies are a ’people business‘, probably more so than in most other industries.
Such a process requires a number of legal advisors in consideration of the number of parties involved who need representation: lenders, PE fund, management team and founders. It is the financial advisor’s role to coordinate this closing process, stay focused and keep the momentum so that the deal closes without missing anything.
What outcomes do you expect your work will have for Castor & Pollux, Omnes and the wider consulting space in France?
We are very proud that we made this MBO possible. In our first meetings, this option was initially not considered either by the founders or by the management team. The reason was a lack of knowledge of this kind of operation and a strong fear of any operation that would involve a private equity partner.
We provided guidance and education so as to mitigate the fears of both the founders and the management team towards this kind of deal. That was our first success, but only the beginning of the transaction journey. We then had to look for the right partner, not only in connection with the financial structure of the deal, but especially to fit with the team’s DNA.
We hope this operation can serve as a testament to illustrate how founders in consulting firms, communication agencies and any other people business can work in order to organise the transmission of their company to their employees. They need to understand that such transactions do not adversely affect the value of their company and can also guarantee its sustainability.
Did you encounter any significant challenges during your work on this operation? If so, how were they overcome?
Every operation has its specific challenges. There is no simple operation and this one was no exception. I will not give specific examples, but as a financial advisor I can say that the more you prepare such an operation at the beginning, and the more you talk with all parties involved within the company to clearly understand their objectives, the more successful the process will be.
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Would you say that your work on this project was representative of the character of DDA & Co?
Absolutely! This operation is very revealing of DDA’s know-how – on the one hand because it involved an independent SME in the communication sector, on the other hand because we had the opportunity to present to the shareholders and to all parties implied options they had not considered. Shareholders and managers were all very responsive to our various presentations and initiatives. This allowed us to enter into a real partnership with them whose objective was to ensure the best operation for all. I definitely can say we achieved that objective.
