by Paul Joyce, Partner at LAVA Advisory Partners
As laid out in my last blog, TCSP firms in the Crown Dependencies are a hot ticket item for private equity investors both here, and in the US. Despite mounting pressure on all sides from inflated compliance costs and fee competition, local TCSP firms have worked their way back on top by doubling down on their strengths: namely the bespoke, relationship-driven service valued by high-net-worth and large institutional clients.
This is an inspiring story about playing to your strengths, as well as a nice microcosm of life in the Islands. However, their recent success has attracted suitors, with the shadow of private equity looming large over the Channel. If, as the founder of a TCSP that’s receiving interest from PE investors, all you’d hoped for was a quick payout, then you can stop reading now. Your phone is likely ringing already, and any one of those calls could produce a fair, or even generous, offer.
However, most founders I know don’t think like that. They don’t just want to extract the highest value for their business, they want what’s best for its future. It’s as much a matter of legacy and continuity as it is pound notes.
So, the barbarians are at the gates, and you’d like to know what your options are. Here’s what you need to hear:
Let’s take five
First, take a breath. Step one is seeing all the pieces on the board, understanding what you want, and what potential buyers have to offer. Clear priorities will help you identify a partner who can deliver what matters for you, and your business.
As proven by the TCSP sector’s resurgence despite unfavourable global economic conditions, there’s great value in what you have. Your team culture, your reputation in your field, and the trust you’ve earned from your clients are worth more than just a dollar value, and handing that over to the wrong buyer can potentially undo decades of hard work.
The Crown Dependencies are tight-knit communities too, so if there’s a deal in front of you that’s hard to turn down, try this exercise: picture yourself in a year’s time. If you run into a former client or employee on the school run, can you look them in the eye? Are you proud of the choice you’ve made? Would you make it again?
Now, this isn’t me trying to convince you not to sell up or merge with a larger firm. The right partner can amplify what you do best and help you scale without losing the magic that got you to where you are. If I can impart one thing to you, it’s this: if you do decide to make a deal, exhaustive preparation is essential. Get your ducks in a neat row. Ensuring positive outcomes for your staff, safeguarding client continuity, and preserving your legacy on the Islands should be your critical concerns before any numbers are thrown around. Once you’ve done that, you can start to consider your options.
Who’s on your dance card?
Let’s start with the obvious. There are the massive, global players who are perpetually active in the TCSP sector at the moment (companies like JTC, Ocorian, IQ-EQ, TMF and Vistra) who are likely looking for scale and synergies on the Islands. This may be where you’ll get the highest value, but it will likely involve you handing over the keys to the business, and could risk disruptive outcomes for your team, not to mention your brand disappearing from sight. So if you’re considering this route, understanding the plans for team continuity will be key to finding the right buyer.
The next tier down are still significant international players; think of PE-backed firms like Suntera, Equiom and Hawksford. Rather than just buying for scale, these players will be looking for niche service providers who can complement their existing operations. For them, your clients, your staff, and your specialist capabilities are their golden ticket. This deal will be more complex, but you’ll have some sway in personalising it. From this level onwards, you may be staying on through post-transaction integration, and even beyond, with the possibility of future upsides.
Here, their expectations around timeline, exit strategy and cultural approach are crucial. You’ll find their approach is more personal, and there’s a higher chance your firm will continue to exist in some form.
For unchanged continuity, you’ll likely need to look to regional specialists and consolidators: firms like Boston, VG Group, Summit and Altum. Like you, these are smaller-scale players in a big pond, focusing on specialised services or geographies and working with a smaller pool of institutional and high-net-worth clients. Here, a true merger may be on the cards, with clear avenues for you to remain involved with leadership and steer the direction of the new enterprise.
In this case, cultural fit is the most important factor. You’re setting up a lasting relationship between the two firms, so the pieces need to fit if the new set-up is going to succeed.
There is one last option, one that doesn’t involve an exit. Standalone private equity investment offers the retention of independent control while providing capital to fund growth. Here, the leadership team, brand, and client outcomes can all enjoy continuity while expanding services or entering new markets.
This option requires a clear vision for the future and robust financials to attract the necessary investment, and is ideal for founders with an absolute belief that their firm can succeed and scale in its current form, but who need further capital to invest and grow, or to reallocate equity across the shareholder base.
The choice in front of you
Every path has its pros and cons, but choosing the right one requires knowing what outcomes you really want. So think long and hard about what your business does well and what it needs to succeed in the future, and ask yourself where you want to be in a year’s time (and in five years’ time).
Don’t rush to accept the first offer that comes across your desk, but don’t reject anything outright. Take the time to consider what this deal will mean for your staff, for your clients, and for your legacy.
Crucially, you don’t have to go through it alone. LAVA wasn’t founded to inflate every deal and rush it across the line. We know how it feels to build something from scratch, to fight tooth and nail and reach a point where someone else decides they want a piece of the action.
We want to help you make a decision that safeguards the wellbeing of your staff, the trust of your clients, and the legacy of your life’s work. If the right deal isn’t on the table, we’ll never push you, but when you’re ready to take the leap, we’ll be right by your side.
