The Great Escape: from public behemoth to private agility

The Challenge

After the success of Abacus achieving a 10 x uplift on the issue price, the plan was to do the same with InterQuest Group. At that point, there was very little liquidity in the Junior Stock Market and a lot of time and cost was going into compliance. InterQuest had also blotted its copy book because the company didn’t hit its earnings forecast, and once that bond of trust is broken in the city, it takes time to earn back the trust of investors. Recruitment had gone out of fashion with the investment community and was seen as a cyclical stock. The valuation was low and InterQuest were stuck in a rut. Being a public company was not working for them.

So, the team set about extricating InterQuest from its public status to become private once more.

The Solution

After looking at all the options, it was clear the way forward was for the management to make a fair offer for the company. It wasn’t easy though. The company’s broker was conflicted, since it was attempting to perform two roles, and was paid twice, once to act as broker to the company and at the same time act as rule three advisor to represent the outside shareholders. The independent directors didn’t feel they could recommend the offer, the broker threatened to sack the CEO, CFO and Chairman. It was a mess and we felt that the City fold were colluding to bully us to remain a public company.

We had to brave it and make a hostile bid, however, bank funding wasn’t possible, because banks don’t like to be seen as the “bad guys” and fund hostile deals. The only way was for us to use our own money, take a deep breath and make the bid. The brokers charged the company for a report they sent to shareholders encouraging them not to accept the management offer and the management team communicated their own analysis to the same shareholders, setting out the reasons why they thought the deal was fair.

Gary remained focused, gritty, persistent and led the charge. “It was certainly not for the faint hearted, but it was the right thing to do.”

The board declared the deal unconditional at 50.01 per cent of the votes and at that point the intention to delist was announced, though there was still a lot of work to do to secure the 75 per cent of votes actually required to achieve that. With a lot of tenacity and persistence, the team eventually secured enough votes for the threshold to be reached, at which point the business re-registered as a private company and the stock exchange listing was cancelled.

The Results

After the dust settled, the company started to make plans to build a more solid business. It took longer-term decisions that would have been difficult to take as a listed company. The parent company which had been set up to make the bid sacrificed profits, funding start-up losses to build the Group we have now become. After the de-listing, the bank stepped in to refinance the senior debt and the company had the flexibility once more to run exactly in the way it needed to in order to grow.

To-date, Group profits have increased, and three new businesses have been seeded and grown.

During the five years we have worked together, Gary has been a supportive coach and a determined business partner, bringing all of his grit, skill and experience as a successful entrepreneur to the table. He has a rare skill of being able to cut through to the heart of a matter, quickly identifying an issue and offering direct, actionable advice, always focused on value creation. We have been on quite a business journey together and I can’t think of anyone better to have in your corner!

Chris Eldridge, CEO, InterQuest Group

“It’s about doing what’s right for the company and the shareholders,” says Gary. “As a public company, none of this would have been possible. However, as a more agile and entrepreneurial company, decisions could be taken quickly and the risks have paid off.”