The Big Secret behind BIG’s VIMBO Success

Keeping a multi-million pound management buyout secret for almost two years is no mean feat when your business involves talking to reporters every day however The BIG Partnership pulled it off flawlessly thanks to a deeply loyal team and the discreet expert support of advisers Craig Corporate.

When BIG co-founding directors Alex Barr and Neil Gibson announced the £11 million sale of the largest public relations firm outside London to a six-strong management team in early 2016, they were finally able to publicly celebrate a ‘win-win deal’that was planned and executed by Craig Corporate behind closed doors in 2014.

Alex Barr says the duo, who formed the PR and digital marketing agency in 2000, had received several acquisition approaches over the years, including one in their first year of operation.

However, they were keen to build value and went on to establish five offices (four in Scotland and one in Liverpool) and to create new revenue streams and services including design, events management and digital marketing, generating revenue in excess of £8 million in the last financial year and supporting 115 jobs.

Barr says their plans for the future began to focus on structuring a deal that would ensure the company’s continued long-term growth and success under their trusted senior management team while also delivering a return that fully recognised the contribution of the founding directors, each of whom had a 40% stake in the business.

It was imperative that any deal could achieve three key outcomes:

  • retain and reward the talented senior team and staff
  • be structured around staged payments by the buyout team
  • result in a smooth handover of the business that would not jeopardise client relationships

BIG’s long-term legal adviser Colin Massie (former partner at Dundas & Wilson) alerted Barr and Gibson to Craig Corporate’s work in structuring a number of successful VIMBOs (vendor-inspired management buyouts) and recommended that they meet the Craig Corporate team. Barr says: “For us, the important criteria in an adviser on this deal were trust and integrity. We had dealings with a number of advisers in London but it was clear from the word go that the guys at Craig Corporate were discreet and professional and had the range of expertise within the business that we needed.”

Barr explains that trust, integrity, respect and professionalism are the core values that underpin BIG’s long-standing relationships with an impressive roster of clients ranging from government bodies to major public and private companies including KPMG, Deloitte, Clydesdale Bank, The Famous Grouse, BP, Shell, Centrica Energy and Macdonald Hotels.

BIG carried out due diligence through their own business network and the verdict on Craig Corporate’s capabilities and culture was wholly positive. “The fact that Craig Corporate shared our values meant that culturally it was the right fit for us. We play by the same rules and live or die by our reputation and track record,”adds Barr.

VIMBOs are sometimes regarded as relatively complex transactions but Barr said the Craig Corporate team clearly communicated from the start how the deal could best work in practice as well as highlighting not only the advantages of a VIMBO but also potential risks and they also provided expert advice on tax implications.

Initial talks led to a detailed plan involving a management buyout with staged payments to be made to Barr and Gibson over seven years and a gradual handover of responsibility to the new team. Barr says: “It made complete sense to us from the beginning. We explained it to the MBO team and within an hour we had agreed every substantive strategic point.”

The Craig Corporate team told Barr and Gibson the VIMBO would only work if all the key players had aligned goals and the founders could adapt to a new role following the deal. Barr says: “Neil and I liked the idea of a change taking place in a controlled way. We made the mental adjustment two years ago –  we knew it would be good for the company and good for clients and that has absolutely turned out to be the case.”

Unusually, BIG has never had a CEO. Barr comments: “It may be part of the reason we were able to achieve such a smooth transition. We’ve always had a collective Cabinet responsibility with everyone having a defined job to do. That worked well in the old structure and it is working equally well in the new structure. We have a very highly-motivated and talented group of people in charge who work well together and who are ambitious for themselves and the business.”

The VIMBO team comprises existing BIG directors Zoe Ogilvie, Allan Barr, Bryan Garvie, Sharon Mars, Andrew Baird and Graham Leitch. Vendors Barr and Gibson each retained a 5% shareholding in the new structure. The structure of the deal meant that the MBO team did not have to seek external funding or take on substantial personal debt to fund the buyout, leaving them free to focus on growing the business and meeting key commercial and financial milestones.

Zoe Ogilvie said: “Craig Corporate were absolutely fantastic throughout the whole process and very good in the way they structured the deal. It delivered for both the outgoing and the incoming management teams and ensured continuity for the business, particularly for our staff. Keeping the deal under wraps for so long was important because when we finally announced it, we were able to demonstrate to clients and staff that it really was business as usual.”

An added attraction of the deal was the self-funded model, therefore the new management team was not beholden to banks or private equity backers. Ogilvie added: “The deal was built on the same foundations as the business was built – trust.”

The deal triggered payouts to 11 senior staff who had shares in the original company through an enterprise management incentive (EMI) scheme. “When we announced to staff that we had news about the future of the company there was inevitably a concern that we had sold the business to a competitor but when they realised the ownership was staying within the company the reaction was very positive,”Barr said.

Holding on to staff was critical as they are key to retaining clients. Barr added: “We don’t own patents or technology –  the value in our business lies in our people and that’s why we had to make sure everyone was on board. Part of the appeal of the seven year VIMBO process is that you are still involved in building a business with so many good people and the MBO team have an opportunity to step up to new responsibilities and they have definitely done that.”

Barr concludes: “As a group, we are naturally cautious and we were looking for the pitfalls down the line but I can honestly say that two years after the deal, there haven’t been any. It has been a really smooth process and the reaction from our staff and our clients has been very positive. We’ve always been dynamic and focused on growth and this has given the team even more impetus for the future.”

Neil Grimmond
About the author

Neil joined Craig Corporate in 2005 and has been involved with both corporate finance and business management assignments. Corporate finance projects have ranged from diligence to...
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by Neil Grimmond