Foster + Partners (2014)

Deal summary

Catalyst originally advised on the 3i growth capital investment in Foster + Partners in 2007. This investment has supported the practice’s growth through diversification by geography and service, as well as enabling its transition to a partnership model. Since 2007, the practice has almost doubled its sales in the US, which now accounts for 27% of billings. It has also tripled its activity in Asia, where billings have grown from 8% in 2007 to 27% today, with particularly strong growth coming from China.

During the investment period, Foster + Partners has won over 700 projects across 60 countries, including Apple’s headquarters in the US; new airports in Jordan, Kuwait, Qatar and Panama; Bloomberg’s headquarters in London; 425 Park Avenue Tower, New York, the first new building on Park Avenue for 50 years; and the Global Financial Centre in Shanghai’s Bund district. Today, Foster + Partners has a record £290 million order book and is well positioned for future growth, with an enhanced geographic footprint and service offering.

3i received cash of £70 million plus £40 million of deferred consideration which, together with cash received to date, represented total cash proceeds of circa £150 million, representing an aggregate money multiple of 1.8x on 3i’s original investment.

This transaction completed the journey that was embarked upon in 2007 to utilise the growth capital investment by 3i as a stepping stone to transition the ownership of the business to a 100% employee owned, long term partnership model.

Catalyst’s role was to advise the Board of Foster + Partners on the strategic options available and based on the recommendations proposed lead the negotiation of the transaction with 3i.

Post the agreement of the deal with 3i, our role involved advice in relation to the optimum shareholding, Board and organisational structure to support the long term partnership model.

Catalyst also provided debt advisory services in relation to the raising of an innovative debt package from a syndicate of banks to provide finance to buy out 3i and to support the future growth prospects of the business under the new ownership structure.

What difference did we make?

Catalyst has had a long term relationship with Foster + Partners and therefore was uniquely positioned to advise the practice on the latest stage in its evolution. Based on our understanding of the practice, we were able to advise on the optimum structure to ensure that the practice is able to maintain its culture whilst continuing to develop on a global basis; retain, attract and reward the most talented individuals in the market; and implement its design-led integrated architectural and engineering services strategy.

Our involvement over the last seven years has supported the development of the business from founder ownership to ownership by c. 140 partners by utilising the 3i growth capital investment as a stepping stone to achieve this transition. This transaction provides a successful case study for a number of other human capital businesses to follow.

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