Strategic Review & partial sale


John started Icom with the help of his wife in 1990, using their family home in Kent as their office. This was Donoghue’s first foray into the world of entrepreneurialism, stepping away from his job with Bailey Telecom. Icom started by subcontracting engineering to others. Very soon Icom grew and expanded to surpass some of the contracting dealers they worked for.

Donoghue said: “From the beginning I took all necessary steps to establish Icom in line with the old fashioned values of service and professionalism, with a high degree of flexibility, making sure we meet all customer needs.”

That ethos has served Donoghue and Icom well over the years. Some 25 years later, the business is a highly profitable operation looking for options to develop and enhance its position and build on their successful organic growth.

The challenge

Icom’s management team had remained unchanged since the mid 90s. The business was financially secure and had a good relationship with a growing list of well-known customers. However, the size of the operation was occasionally questioned by some procurement managers.

Additionally, the market was changing, and its proposition had to evolve accordingly without losing the company’s core values. Donoghue knew the company needed to change by expanding its management skills and product portfolio to maintain and enhance its growth trajectory. Ultimately, the management team considered a partial exit or merger with a larger entity as the solution.

Donoghue explained: “Once the decision was made, I then started to look for business advisers who could have the correct input and hold our hands to find the appropriate partner”.

Advice, planning and preparation

Icom approached a number of recognised business advisors – all experts in the TMT sector. A shortlist of three was made and Evolution Capital was one. Donoghue said: “From the outset Evolution Capital was the one I felt most comfortable with. The team understood our marketplace well and took a great deal of time and effort considering our requirements in finding the best partner for us. Although realising capital was important, so was finding a partner who shared our values – specifically in the area of customer and staff care”.

Evolution Capital carried out a detailed study of all the company’s operations, finances and transactions to:

• Highlight the areas needing immediate changes in order to attract a buyer
• Detail an anticipated valuation after implementing the recommendations
• Identify the opportunities for up-selling and cross-selling for a potential acquirer

Maximising the value through business change

Evolution Capital identified where changes were needed to interest the right buyer on the best terms. Icom implemented the recommended changes and immediate benefits started to accrue:

1. Major changes in the F&A process delivered significant cost savings
2. Fundamental business processes were improved delivering further cost benefits
3. A greatly enhanced adjusted EBITDA was made as a direct result of the new streamlined approach
4. An increased valuation for the whole business from the resultant changes

Donoghue added: “Prior to Evolution’s strategic review we had some very general ideas about a way forward but the study really focussed us on what sort of partner we needed, and what we had to do to attract one. The company needed a buyer with the right culture and ethos to make it a win/win for both of us. The review highlighted the areas where obvious changes were necessary and once made we immediately started to get positive results. It was a great piece of work.”

A successful outcome

Evolution Capital moved onto the next part of the engagement and produced an Information Memorandum (IM) to start the marketing process and identify appropriate buyers. Initially 12 interested parties were identified and were invited to meet with Icom over a three-day period. This exercise produced six indicative offers – all in line with the valuation given in Evolution’s strategic review. Each buyer was then invited to propose the details of their offer and a short-list of three was drawn up. After more detailed meetings the company found the buyer they were looking for, at a price and terms they were seeking.

Donoghue said: “ I was delighted to agree on terms with Bahman Rahimi of BDR Voice and Data Solutions who bought 60% of Icom Holdings. Evolution Capital played a key and pivotal role in helping me select one of the best and most suitable companies to align Icom with. With the benefit of the enlarged organisation, new management team, expanded product and services portfolio, Icom are in a much better position to address their markets with much more ease and belief.”

The deal, as reported in Comms Dealer last year, has provided Icom with, amongst other things, much-needed sales and marketing expertise. BDR and Icom benefitted from two good cultures and the fusion of these has created a new, dynamic, energetic and exciting work environment for all staff to practice their skills in the best way possible.

The next chapter

Icom is now an impressive organisation employing 150 staff with a growing customer list from across the UK and Europe, including international retailers, global electronic giants, the NHS and other public sectors.

The company has diversified its portfolio of services to include supply of hardware, in-house hosted solutions, total IT infrastructure design and implementation, mobile, structured cabling, fire safety, security systems, MSP, MSA and full data centre resilience.

Donoghue concludes: “Icom was already a trusted supplier to a number of large organisations, however with BDR’s involvement and with an ever increasing product portfolio and mission critical services, we are confident in our ability and know we belong to the elite when it comes to engaging our customers.”