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20140618 Mentec Case Study_Kevin Haverty
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20140618 Mentec Case Study_Kevin Haverty

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Kevin Haverty is an independent management consultant working with small owner managed businesess on strategic development and implementation. Kevin has over 30 years experience in the IT industry and …

Kevin Haverty is an independent management consultant working with small owner managed businesess on strategic development and implementation. Kevin has over 30 years experience in the IT industry and as CEO of Mentec International, he led and implemented their exit strategy which culminated in a successful trade sale in 2006.

Published in: Technology, Business

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  • 1. MENTEC CASE STUDY Luck happens when Opportunity and Preparation coincide
  • 2. Kevin Haverty : Introduction  Working in IT industry since 1980  Software Developer  Sales Management  CEO of Mentec 2000 – 2006  Independent Business Consultant since 2008  Director of Unit 4 Business Software Ireland
  • 3. Mentec Background  Founded in 1978 by Dr Mike Peirce, (TCD)  Mentec “Group” had become a successful but diversified operation with processor design, hardware distribution and application software revenue streams.  In 2000, the company was split into its separate components.  I was appointed as CEO to Mentec International Ltd, the software services.
  • 4. The Challenge  Shareholders were looking for value realisation.  Business was profitable and cash generative, but ... “Legacy” products Overly dependent on home-market (ROI) No clear strategic (long-term) direction Heavy overheads “Life-style” business?  Challenge : How to “Realise” value? We needed a strategy
  • 5. Strategic Approach  5 year strategic plan  Worked with independent consultants in building the strategic framework  Clarity re shareholder’s exit goals  Customer and industry feedback  Realignment of executive management goals  Documented Plans
  • 6. 5 year Plan Key Objective:  Achieve tangible shareholder “value” in 5 years Options to include :  MBO,  Trade sale,  IPO on AIM,  Merger.
  • 7. Our Focus 1. Get organised : Management Structures and Operations 2. Tidy up / strategise our product portfolio 3. Align with a global partner (Microsoft) 4. Develop international services 5. Create IP 6. Become more visible
  • 8. Strategy Implementation 1. The plan was documented 2. Operational planning Provided a clear focus with frequent reviews Capability planning Management and shareholder communications and trust. 3. Horizon Planning Tidy Up - Microsoft – Export 4. Sense of a journey
  • 9. Examples of some key actions Management Tidy Up Microsoft Share Option Scheme Exited non-strategic lines Acquired local MS VAR Board Formality • Hardware Build real MS partnership Financial Reviews • Legacy s/w Transitioned s/w dev team Expert Advisors • Non-MS lines UK Business IP Visibility Worked with Ian Shearer on UK acquisition Developed “apps” for partner products Invested in marketing and “brand” development Purchased business in London & East Midlands Set up a Microsoft ISV Worked on our PR – published wins etc Integration was not trivial EI R&D programs & project funded IBEC (ISA) involvement
  • 10. Result Various opportunities were considered including  MBO  Merger with another Irish software services business  But most realistic opportunities were coming from potential acquirers  In Dec 2006, Mentec was acquired by Calyx Plc, then listed on AIM.
  • 11. The Acquisition  Very fast negotiation & due diligence.  All cash deal – paid over an 18 month period.  Confidentiality was maintained up to day of signing  Key executive management remained in place.  Significant opportunity for Mentec to be the first software services element of a rapidly growing multi-national operation.  Integration was challenging as Calyx moved from Public to Private in early 2007.
  • 12. Views on Exit Strategies?  Every case is unique.  Financial results should be consistent with your “story”.  Be Prepared Always  Strategic direction must be crystal clear  Have your presentation ready to roll and up to date  Logical, straightforward and compelling story  Good house-keeping will help  Ensure shareholders are “on board”
  • 13. Views on Exit Strategies?  Visible management structure and team  Why are your key people loyal?  The devil is in the detail (contracts etc..)  Just like selling product, must know  your target “sweetspot”  your USPs  and your “BATNA”  Use expert advice (Financial, Taxation, Legal, M&A)
  • 14. Finally, ...on being acquired  Not easy for managers who remain on board  Caught in the middle  Challenged by new owners and your own people.  Don’t assume the acquirer will have all of the answers when integrating your operation.  Expect change, both good and bad.
  • 15. Thank You  Mobile : 087 2865638  Email: kevin.haverty@kha.ie