Acquirer Spring 2013 - Livingstone Partners

COVER STORYtransaction. We understood the importance ofprotecting City Screen’s DNA in any transaction.”Goleby explains: “We would not have gone pastfirst base on the deal if I had not quickly becomecomfortable that Cineworld valued the peoplein the business it was buying and intended topreserve its values and brand,” she says. The fit issufficiently complementary that she remains asManaging Director of City Screen and the businessis operating as an independent unit of Cineworld.“The long period that Christopher and Simonspent observing our board meetings and workingwith us informally, without a transaction in play,was very important,” she continues. “They hadANY POTENTIALPURCHASERHAD TO COMMIT TORESPECTING THEINTEGRITY OFTHE BRANDa strong understanding of the dynamics of theboard and how to deliver against differentstakeholder requirements, not to mention adetailed understanding of the managementaccounts gained over a period of years, ratherthan a few days or weeks.”READY FOR ACTIONThe long-term relationship meant thatLivingstone was ready when Cineworld made anunsolicited approach to acquire City Screen in thesummer of 2012. While the initial valuation wastoo low, Livingstone saw the potential fit andhelped Cineworld understand that the businessmerited a substantial strategic premium.Once an improved value had been agreed,Christopher Jones had the challenge of keepingall the stakeholders in the deal motivated andon side. “Negotiating the optimum deal with thebuyer was a prerequisite, but we also needed tounwind City Screen’s complex capital structureand negotiate a deal that all the stakeholders werecomfortable with,” he explains. “Once we agreed adeal with the purchaser, and then agreed a deal toapportion proceeds between the stakeholders, itactually proceeded relatively smoothly.”Goleby recalls: “I spoke considerably more toChristopher than to my husband over the courseof the deal. Christopher was always on the end ofthe telephone – for the easy and difficult tasksalike. Once the time came to get to grips with theincredibly complex financial structures that comeout of a 20-year-old, VC-funded company with amass of JVs and subsidiaries, then the spreadsheetscame thick and fast from Livingstone.“But I came to know that Christopher would betalking to all the parties either daily, or certainlyas often as they could usefully be kept in the loop,and had total control of the process. When he tookhis paternity days on Fridays, I had a vision of himupdating us all with a nappy or a buggy in onehand and a mobile phone in the other!”Livingstone led the negotiations to agree headsof terms, following which it ran a tight process tocomplete the transaction within eight weeks. Thedeal completed on the terms originally agreed,representing a very attractive multiple ofapproximately 10x EBITDA.STRONG RETURN ON INVESTMENTIn addition to a considerable return for CityScreen’s founders, the deal gave their long-termfinancial backers a very strong return oninvestment. Henry Stanford, Partner at AlbionVentures, says: “Lyn has been a joy to work withand we have been very happy to play our part inbuilding up the City Screen group. Livingstone dida good job in aligning the shareholder interestsfor the deal and keeping negotiations on track.”Oliver Shapleski, Arts Alliance’s Head ofBusiness and Legal Affairs, adds: “The Livingstoneteam was a solid and trusted sounding board forthe Company for more than four years, but reallyshowed their exceptional value when the Companybegan exit discussions with Cineworld.“We felt the entire team expertly navigatednegotiations, both between the Companyshareholders and with Cineworld. Having knownall of the parties involved for many years,Livingstone was acutely aware of the dynamicsneeded to ensure a successful transaction. Fora bid lacking competitive tension, Livingstoneexcelled at keeping momentum behind the dealand securing full value for shareholders.”“This is a fantastic result for Lyn, her team andtheir investors,” says Cope-Thompson. “Cineworldis the natural home for City Screen, and being partof the larger group will enable it to capitalise on itsexciting growth opportunities.”Goleby adds: “We’re taking time to understandeach other and to explore the possible areas whereintegration will help the respective offers. We’repreparing new projects for construction, will bebuilding at least two new sites this year and havehad the okay for all our key investment projects.Exciting times!”Contact:Simon Cope-Thompson, Partner,Livingstone LondonT: +44 (0)20 7484 4706,E: sct@livingstonepartners.co.ukChristopher Jones, Director,Livingstone LondonT: +44 (0)20 7484 4724,E: jones@livingstonepartners.co.uk8 // WWW.LIVINGSTONEPARTNERS.COM // SPRING 2013