Case Studies

Assisting with due diligence and post-merger integration for a market research firm

A leading qualitative market research agency

Flamingo International is a qualitative market research agency which delivers insight and advice to many of the world’s leading brands. The company was founded in London in 1992, with impressive growth in every subsequent year. Offices were established in San Francisco and Singapore in 2001 and 2003 respectively. In the year to 30 April 2006 the group recorded sales of £13 million.

FD required for expanding business

Flamingo approached FD Solutions in late 2005. The company, which was still owned entirely by its management team, had no in-house financial management and relied on its auditor for financial information. The owners had an excellent intuitive grip on their business, but felt that because of the increasing size and complexity of the organisation they needed closer financial support. One of our directors was appointed as part-time FD of Flamingo in December 2005.

Setting-up finance team and reporting systems

Their first step as FD was to bolster the finance department by adding a part-time management accountant. Accounting was brought in-house at Flamingo’s next year end, regular monthly management reports were issued and project profitability was monitored, giving confidence that estimates used for customer pricing were accurate.

Dealing with a trade sale

Flamingo received an approach from a potential acquirer and engaged Results International, a specialist M&A adviser to the Marketing and Communications sectors, to review Flamingo’s options. The upshot of this review was that shareholders decided on a trade sale. Our FD worked alongside Results as the  shortlist of purchasers was created, in particular clarifying historical trading data, contributing to the Information Memorandum and presenting to would-be purchasers alongside the founders. He also worked with tax advisers Kingston Smith to implement a share option scheme for senior managers.

Assisting with due diligence

In September 2006, Omnicom, the US-based marketing services giant, was chosen as preferred bidder. Through October to December, FD Solutions shepherded Flamingo through the acquisition process, providing the interface between Flamingo shareholders, lawyers, tax advisers and Omnicom’s financial and due diligence teams. On 19 December 2006 the Flamingo group was sold to Omnicom.

Post merger integration

Following the sale, FD Solutions helped to smooth the integration of Flamingo into Omnicom by introducing procedures and resources to meet the significantly heavier financial reporting requirements – not least adherence to Sarbanes Oxley requirements. Despite inevitable disruption caused by the change of ownership, during 2007 the group continued to grow at a fast pace, opened new offices in Tokyo and New York, is on track to achieve its earn-out targets.