Acquirer Spring 2013 - Livingstone Partners

SECTOR: FINANCIAL SERVICESBanking on changeThe recent dividend recap of insurance software business iprism is the thirdtransaction founder Gary Burke has completed with the Livingstone Partners team,and highlights the value of a trusted relationship with a corporate finance adviserLaunched in 2006 by former insurancebroker Gary Burke, iprism is an insuranceintermediary that provides new policies andrenewals to brokers, on behalf of leadinginsurers such as Axa and Aviva. It hasrevolutionised the speed and efficiency of bothprice testing and purchasing. Its proprietaryonline platform generates comparative quotesand policy documentation, which can be chosenand bought in minutes.Burke had worked with Eleanor Wilkinson,Director at Livingstone London, on the sale of hisprevious business, Home & Legacy, a high-networthhousehold insurance intermediary that wasacquired by Allianz in 2006 for close to £60 million.“Eleanor was the first person I turned to once iprismhad reached a point where it could benefit from anew investor,” says Burke. “I’m very glad I did; theLivingstone team added value throughout.”During 2010, Livingstone introduced Burketo a number of potential investors keen to backTHIS SHOWSHOW IMPORTANTIT IS FOR AN ADVISERTO GET CLOSETO ITS CLIENTSiprism. Magenta Partners, which invests in highgrowthentrepreneurial e-commerce businesses,quickly emerged as the preferred partner. iprismwent from break-even at the point of Magenta’sinvestment to achieving over £2 million EBITDAin 2011 and more than £4 million in 2012.This rapid growth in profitability meant thatiprism had become potentially more attractiveto lending banks and that, by raising bank debt,it could repay Burke and Magenta’s loan notesissued as part of the 2010 transaction. But Burkeknew that banks were still nervous about‘dividend recaps’ – deals that see new bank debtbeing used to repay existing investors – and againsought Livingstone’s help, as he explains.“Despite the fact that iprism is a great successstory, the current financial environment means itisn’t easy to get cash out of a company. Livingstonedid a fantastic job in putting the presentationtogether, and identifying and dealing with anexcellent short list of potential banking partners.”Knowing the business so well enabledLivingstone to field questions from potentiallenders and reduce the burden of the transactionon Burke and the iprism management team.The deal, says Wilkinson, had its challenges.“Despite the fact that iprism has numerousqualities attractive to lenders, the company’shistory is still relatively short. Some banks mightnot be comfortable with just a couple of years ofprofitable trading and would prefer a longer trackrecord. However, all the other aspects of theiprism business model outweighed this.”In order to find the right banking partner foriprism, Wilkinson and Bill Troup, ManagingDirector of Debt Advisory at Livingstone London,created and managed a competitive process.“A number of banks and alternative lenderswere approached,” says Troup, “but Royal Bankof Scotland’s FIG team (RBS) was the mostappropriate for the deal, because it understandsthe insurance sector and its potential. iprism’sprofitability, strong cash generation and visibilityof earnings deliver the perfect characteristics tosupport leveraged debt. This was an excellentopportunity to return cash early to Magenta,and the best option financially.”Burke says RBS has proved to be an excellentpartner, as the bank really understands whatiprism is about. “It is a great match, and thetechnical knowledge and banking experience BillTroup provided enabled us to perfect the debtstructure to suit both parties. Getting the right fitcan be difficult, but Bill and his team worked veryhard to ensure that all parties were happy.”Reflecting on this third deal together, Wilkinsonsays that Burke and his team are a pleasure towork with. “Gary has great vision; he can predictwhere the market is going and builds his businessaccordingly. I’m confident that we have structureda deal that will benefit all and enable iprism tocontinue its market-changing development.”Burke adds: “Identifying such a good matchfor iprism and RBS shows just how importantit is for an adviser to get close to its clients.Livingstone kept a tight rein on the process andthe deal has been an outstanding success.”Contact:CELIA MATHERDEAL AT A GLANCECLIENT: IPRISM UNDERWRITING AGENCY LTDSECTOR: FINANCIAL SERVICESDEAL TYPE: CAPITAL-RAISINGBUYER: ROYAL BANK OF SCOTLANDBill Troup, Managing Director,Debt Advisory, Livingstone LondonT: +44 (0)20 7484 4722,E: troup@livingstonepartners.co.ukEleanor Wilkinson, Director,Livingstone LondonT: +44 (0)20 7484 4742,E: wilkinson@livingstonepartners.co.ukIMAGES: GETTY, ISTOCKPHOTO22 // WWW.LIVINGSTONEPARTNERS.COM // SPRING 2013