Fuse Networks has been acquired by Management

The Challenge

- The client was a middle-market Managed Services Provider of outsourced IT, integration, and network management services.
- The four shareholders intended to gain liquidity through a majority recapitalization.
- The company’s shareholders looked for a complete sale of the company, with one critical shareholder planning to continue with the company post-transaction. This would allow for continued success and expertise under a new owner, while this shareholder guided operations.

The Solution

- The challenge the Merit Investment Bank team faced was to quickly pivot the transaction approach to successfully execute the liquidity event while internal issues severely impacted the ability to retain outside buyer commitment.
- Additionally, the company held high customer concentration, increasing perceived risk and drastically lowering the company’s valuation.
- Throughout the sales process, the Merit Investment Bank team had to also contend with a lack of cooperation and cohesion between shareholders, requiring increased focus and tenacity as an advisor. The situation heightened the need for intensity, insight and creativity by the Merit Investment Bank team, shifting the transaction strategy to a management-buyout.
- The deal team extracted value from the company by helping the continuing shareholder pivot the business, creating a long-term solution to recover from the roadblocks that arose from the misalignment of original shareholders.

The Results

- In the end, the continuing shareholder successfully transformed operations and transitioned the business into a more manageable and profitable model.
- With this new management structure, the main shareholder was able to make decisions that progressed the company and pursue new mandates that proved to be sustainable for the company.