A gamble worth taking

David Lester, founder of Crimson Publishing, tells the inside story of the company’s purchase of ICP Media


August is traditionally a quiet month and I always love being in London.

The roads are quieter, it’s usually decent weather, and the whole pace of life seems a little more measured. So I was looking forward to it. Then, in late July, we were approached about a competitor which had gone into administration – did we want to purchase it? And by the way, the administrator was looking for a quick sale.

What followed was fascinating. As a growing business we’re always open to the right opportunities, so we expressed interest and signed the confidentiality agreement needed to release the company information. We received this on a Friday, with bids due in writing by the following Tuesday. We knew a little about the business already, but there’s an enormous difference between knowing a little, and knowing enough to actually buy a business.

With the business in administration, it proved difficult to track down where different bits of information actually were. Eventually we found enough for us to be sufficiently comfortable to table a bid. We heard the next day that we’d won, despite numerous other bids. Which was good news – or did it mean the other bidders knew more than we did, and hence we’d overpaid?

Trying to work out how much to pay was interesting – especially for a oneround, sealed bid process. We wanted to succeed with our bid, but at the same time we didn’t want to pay more than we had to. And of course, with the business in administration it’s very hard to establish future revenues.

The price also included what we had to pay the administrator and the cost of making redundant any staff we couldn’t find suitable roles for. I hate making people redundant and even though I didn’t know the people, it was necessary for the business to survive. It will probably be a year before we know whether we have in fact overpaid – I’ll let you know when it becomes clear.

When I first read the contract for sale, I was shocked. The contract explicitly got the administrator out of any indemnities, so we were unable to rely on anything he had told us, verbally or in writing, while requiring full indemnities for various things from the acquirer. For example, if the company had leased any of the assets, which we were told they hadn’t, then not only would we not own those assets, but we would need to make good any damage done to them by us (for example, had we scrapped them).

I presumed that the contract would get changed as soon as they realised we wouldn’t play ball. Wrong. In fact, we learned the bulk of the contract was pretty standard, and we needed to live with it or pull out. That took some deep breaths, followed by more reviewing of information, but we decided to go ahead. We signed the Monday following the Tuesday offer deadline, not two weeks after first hearing about the opportunity. Phew!

We then needed to integrate the business; welcome our new staff, and let them know the new gameplan. And of course, it being August, quite a few staff, as well as our own support team, were away on holiday. It was hectic, to put it mildly.

And the business we acquired? It publishes websites for the small to medium-sized business sector, both for itself and for other organisations, and makes us the leading publisher, by quite some way, of information for entrepreneurs – as you can tell, we’re proud of that. One of its sites is called Venturedome, focused on the private equity world, and you should see greater coverage of deals in Growing Business from now on as a consequence. It’s a very strong fit for us, and that was critical to why we were able to do the deal in this timeframe – and why we felt confident doing it. It’s also why we couldn’t pass – we didn’t want to give any of our competitors the chance to buy the business.

So much for a calm August.

David Lester, founder of Crimson Publishing, has established or run half-a-dozen businesses, as well as advising others.

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