Entanet

Deal summary

Entanet is an award-winning wholesale communications infrastructure provider which uses third party networks to deliver a wide range of connectivity and telecommunication products and services to internet service providers. The business services the wholesale market with its primary customers being resellers into the B2B market. Its core products cover ADSL and Fibre (leased lines) solutions as well as more complex telecommunications packages (including VoIP).  Network monitoring and performance optimisation are also core services within their end-to-end solutions.

From its headquarters in Telford, the business employs 100 people and generates revenues of c£36 million.

The business was formerly part of the Enta Group up until 2014 when Elsa Chen, CEO, led a management buy-out backed by Mobeus Equity Partners LLP. This acted as a significant milestone for the business and since then, sales have grown by [30%] per annum between 2014-17.

The business received an unsolicited approach by CityFibre, an AIM-listed rival to Openreach. Given the quality of the business and management team, a strong track record and a credible growth plan, Entanet represented an attractive acquisition opportunity to CityFibre which was seeking a platform to upsell their existing fibre capacity. The deal also gives Entanet a new route-to-market and many other complementary opportunities for growth, resulting in tremendous synergistic value.

In conjunction with the proposed acquisition of Entanet, CityFibre was also undertaking a £200m fund raise, which posed a risk to the deal in terms of certainty of funds. This formed a critical element of the sale transaction.

At this stage, we were formally appointed by the shareholders due to our experience in the Telecoms sector and ability to manage complex Plc acquirers. Our scope was focused on delivering a successful sale transaction and maximising value from the deal.

What difference did we make?

At the outset, we undertook a comprehensive review of the business and assessed its readiness for sale. This included reviewing a complex forecast model, the legal background of the business and any potential value drivers/inhibitors. We also assisted in preparing a Management Presentation and, alongside legal advisors, preparing the electronic data room.

We facilitated an initial phase of due diligence (“Stage 1”) which involved sharing some high level information with CityFibre, as well as delivering the management presentation. We also negotiated a number of key principles at this point to ensure there was little room for manoeuvre during the next stage. This enabled CityFibre to submit a more informed offer on better terms for the shareholders, all prior to granting an exclusivity period.

Once the offer was accepted by the shareholders, we granted a short period of exclusivity in which CityFibre would perform their formal due diligence and legal negotiations (“Stage 2”). We managed the due diligence process for the shareholders and ensured maximum value was obtained from the locked box negotiations.

Throughout the entire process, we were liaising with CityFibre and their advisers on the fund raise to understand timeframes, issues or concerns which may impact the sale/acquisition.

We completed the sale within six weeks of the revised offer in order for it to be co-terminus with the wider fund raise, demonstrating the value of detailed business preparation and a well-tailored deal strategy. The deal was a highly successful exit for Mobeus and generates a very strong opportunity for Management going forwards - all of whom are continuing with the business. In CityFibre, the Management team have secured a partner with tremendous ambition and support to grow Entanet for the foreseeable future. 

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