This company was the largest managed services and data hosting center in England and Central Europe. It had four data centers and over 500k square feet built out over four different countries.
Situation: Largest shareholder runs out of capital
A difficult assignment, as this company located in England and Central Europe would test the knowledge and abilities of the VEER Group teams while treading the waters of strong social labor programs, European business laws and large scale economic shifts. The control-based shareholder hit hard by a market adjustment could no longer fund the extreme capital requirements of this giant successful startup. He was particularly concerned about personal liability, as doing business in these countries opens up a higher level of risk to board members and shareholders.
The financial model showed a need for nearly $700M in capital requirements to reach CFBE with nearly $100M spent at this point. The leadership had been pushed hard toward hyper growth mode, and were therefore blindsided by their new reality of a complete stop in spending and forcing a need for crisis management with a new way of thinking.
VEER Group’s Role: Survive and find an exit fast
A deep financial analysis immediately commenced. There was a juggling act to keep the company from filing for liquidation, while marketing the business for an exit, which was the focused priority of the stakeholders. VEER Group stopped construction contracts where possible. The majority of the Sr. Executive and middle management teams were laid off. A strategic analysis of the viability to part out the four data centers was diligently completed, and it was determined that the only way to exit the business was to sell it as a whole company. During the exit analysis, VEER Group was able to find other investors entering the EU market and narrowed the focus of their efforts on an investor in Ireland. This investor had 200k square feet of data centers with a goal of covering 1M square feet.
Outcome: With no additional capital, company stays afloat and exits.
This was an extremely successful outcome for all stakeholders. The company merged into what is now one of the largest data hosting centers of the world. VEER Group was able to stabilize the company long enough to avoid a capital call from the struggling investor or any other capital source even though a working line of credit was available through Société Général. Operations were maintained allowing the company to stabilize during exit negotiations and subsequent integration to the acquirer.