March 15, 2011 and for more than 72 hours lawyers and specialist advisers were locked in negotiations in central London to sell Great Yarmouth-based J&H Bunn to American firm Koch Fertiliser, a subsidiary of Koch Industries, the world’s largest private company, as talks were reaching their endpoint.

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Precise details of the multi-million pound sale have never been disclosed, but eight months after the Americans first expressed an interest and hundreds of hours later a deal was struck.

It was a process that also spilled beyond the boardroom including meetings at the Royal Norfolk Show, while the talks with the Americans even featured a dinner at Great Yarmouth and Lowestoft Rugby Club and the virtual hiring-out of Norwich’s Last Wine Bar, a popular venue among Norfolk’s business community, as part of an effort to win over the Americans.

A leading EDP Top 75 company, Great Yarmouth-based Bunn, which sells fertilisers to farmers and growers across the country from nine factories as far apart as Montrose in Scotland and Falmouth in Cornwall as well as Payne Brothers at Fakenham, was also ranked 176 in the Sunday Times ‘Top-Track’ list of UK private companies.

Last year saw its profits soar by more than £4m to just over £12.1m thanks to increased demand for its products, while turnover increased by 26.3pc from £141,566,170 to £178,797,065.

John Fuller, one of Bunn’s directors, who led the sale process for Bunn on behalf of the Norfolk shareholders, said the sale proved one of the most complicated deals ever carried out.

“Back in 2010 there wasn’t a strong appetite to sell our business,” he said. “It was growing and enjoying a run of good years after a very lean period in the early 2000s. We certainly weren’t really ready to sell. But, out of the blue, a large American firm made an offer that made us sit up.

“Reflecting on the offer we realised that, like many family businesses, succession was becoming an issue and the family capital to grow the firm still further was only finite. A feeling grew that it might be time to pass the baton of control to others with access to greater resources and, perhaps, ambition to expand our company overseas.

“We decided to sell. And because you can only sell your business once, if you are going to do it, you’ve got to do it properly. And we recognised that the skills to help us existed right here in Norwich.”

Mr Fuller contacted Adrian Possener, commercial partner at Birketts in Norwich, to sound him out about where the firm should go next.

Taking up the story, Mr Possener said: “I knew John socially. We’d had dinner a fortnight before and later I was invited to pitch for the business disposal. He said it would be straightforward as there weren’t any issues. I wanted to learn about the company and had a pre-meeting with John at the Norfolk Show. But it turned out that everyone knows John, so every time we started talking, another person would come along, so it took much longer than I planned.

“But I learned about the company, formed a view about it and the issues involved.

“In pitching to the directors, it was clear to me what they really needed was advisors who were close at hand, who they could drop in and see at any time and who were sympathetic to the way that they ran their business. They needed the ‘personal touch’ that you don’t get from the large, London-based firms. I was able to say we had the experience and the chemistry. It was going to be a very intensive process and if you do not like your lawyers, it could become a disaster.”

Mr Fuller, well known as Conservative leader of South Norfolk Council, said after agreeing to hire Birketts a key piece of advice from the lawyers which stuck with him was the reminder that it was “the American’s job to buy, not your job to sell” and “If you are going to sell, do it on your terms”.

“Like other things he taught us, this set the right tone from the start and provided a framework within which a deal could be delivered,” Mr Fuller said.

“Pretty quickly we discovered that we needed to hire more help. Selling a business is a well-trodden path. The process can be likened to the ‘Dance of the Seven Veils’ where, progressively one garment is revealed one after the other. Your advisors help you to reveal just a little more at the right time at a pace that makes sense for the deal yet maintains everybody’s interest!

“Stephen Oldfield, from PwC in Norwich marked our dance card as we progressed down a path that eventually saw 44 specialist advisors of one form or another assist before we signed.

“For a whole variety of reasons, the deal had a number of complications,” Mr Fuller said. “The prospective purchaser didn’t want to take the whole business. He wanted to leave some activities and properties behind.

“Not all shareholders wanted to sell while others were keen to move on. Things that seemed peripheral to the running of the business suddenly assumed much greater importance, for example the pension scheme for long-serving employees. A seeming army of lawyers and accountants ironed out all the complications and made it look easy even though we knew they were working long hours.”

Mr Possener said: “I co-ordinated the legal work and Stephen Oldfield’s team controlled the timetable and managed the process and, helpfully provided a firewall to the negotiations – we didn’t want the purchaser to pick up the phone and talk directly to the seller.

“That’s probably how most people do their business, but in a transaction, you want someone to act as a barrier so that everything is done in the right order.”

Mr Fuller added: “That’s not to say that we did not engage with the other purchaser at all. Once the shareholders had decided that they wanted to maximise the sale price rather than take a discount for a quick sale, the next thing was go down to London to meet a company most people may never have heard of: Koch Industries.

“It was a David and Goliath moment. They are big players on the global stage and they brought a big team and there was us Norfolk boys sitting opposite them. We had an interesting time.”

Based in Wichita, Kansas, Koch Industries is run by billionaire brothers David and Charles Koch, employing 50,000 people in the US and about 20,000 people in 59 other countries in industries ranging from petroleum and energy, minerals, fertilisers and even the production of lycra.

The brothers are also said to be backers of the Tea Party. When it came to business the company’s hard-nosed reputation showed at an early stage.

Mr Fuller said: “They made their position clear. Naturally they were trying to lay down ground rules and the terms upon which they offered to buy our business.

“It was our job to wrestle control of the deal on our terms. Our shareholders had instructed the directors to agree a ‘clean deal with no comebacks’, which was easier said than done when one of the world’s most experienced M&A [merger and acquisition] teams is sitting playing hardball on the other side of the table.

“But the team of Norfolk advisors had other plans. One tried and tested tactic is to produce an ‘information memorandum’ (IM) for the purchaser to examine. It’s a comprehensive brochure that described our company and how it worked and allows a purchaser to form a better view of what he may be purchasing and to revise his price accordingly, upwards, naturally.

“When we played the ‘IM card’ the atmosphere in the room changed. For the Americans it was ‘time out’. They realised that they weren’t going to get our iconic Norfolk firm on the cheap.

“After a few weeks a substantially increased offer was forthcoming and we entered into exclusive negotiations with them. The genuine threat of going to auction had yielded up the desired result.”

Mr Possener added: “One of the key advantages of this approach is that it signals to the purchaser that an auction could take place – they may not be the only people in town and if they don’t come up with a special price, they may lose the deal.”

However, the next issue to emerge was that of Bunns’ shareholders, some of whom had different thoughts on the deal, which was going to emerge as an issue as the negotiations continued.

Mr Oldfield said: “The lesson here is to not underestimate the shareholders. It’s their business after all, so don’t underestimate the difficulties of getting them all on board.

“We had some siblings who had strong views on what they wanted to do. Others were in a less advantageous tax position. With three families owning the business there is one person who is going to save the day and that’s the chairman. It’s his job to keeps the shareholders in line until the deal is done.

“Part of that discipline was to enforce confidentiality among the shareholders.”

Loose lips sink deals. But as both sides were grinding out the terms of the deal with the respective lawyers, Mr Fuller was surprised to read some confidential details in a French industry tip sheet.

“It turned out one of the purchaser’s employees had been gossiping about the deal to a colleague on a plane coming back from Moscow and a competitor was sitting in the row behind,” he said. “Loose lips indeed”.

After eight months of long days, due diligence – nearly 15000 pages of information supplied, disclosure, site visits and other investigations the lawyers were getting more aggressive.

Tempers were starting to fray following a series of marathon all night calls to the US and a 72-hour straight run before the deal was signed.

Out of the blue the US lawyers said they wanted to delay for another day, sparking fears that a last-minute glitch would derail the deal.

Yet that magically evaporated when, at 8.30am on March 15, the deal was finally completed and mountains of paperwork had been signed.

“Looking back we totally underestimated the volume and intensity of the work involved in getting the business away,” Mr Fuller said.

“One of the lessons we learned was about the importance of preparation and the need to trust your advisors: They’ve been there before: it’s only when they start to look worried that the seller needs to be concerned.

“The Americans told us that they had done $33bn worth of transactions in the last decade, and this was the most complicated deal they had done.

“We were very pleased to keep all our advice in Norfolk using Norwich firms that outpitched the London firms. The Norwich team earned their spurs.

“And as one grateful shareholder remarked, it seemed like overkill at the time, but it was all necessary to get the best deal, and that’s what we did.”




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