Situation
first:telecom is one of Europe's fastest growing telecommunications companies with operations in the United Kingdom, Germany and France. first:telecom focuses on serving the communications needs for voice and data services of small and medium businesses ("SMEs"), those that work from small offices and from home ("SoHos") and high value businesses across Europe.
In October 1999, first:telecom raised private equity financing of £40 million from Providence Equity Partners and Morgan Stanley Capital Partners to accelerate its broadband data services strategy in Europe, both organically and through acquisitions.
ARC Associates was retained by first:telecom to identify potential internet service provider ("ISP") acquisitions for first:telecom in its countries of operation.
Approach
Using criteria agreed with first:telecom, ARC Associates commenced a review of both the German and UK business ISP markets. An extensive call programme was required in Germany due to the highly fragmented nature of the German market. Interactive Network GmbH ("Interactive Network") was identified as being a technically capable ISP with a strong and growing customer base in Frankfurt. ARC Associates contacted the company in late November, completed preliminary due diligence and structured a part cash part share offer to acquire Interactive Network.
The Transaction
After a series of negotiations with the vendor, the offer was accepted and ARC Associates co-ordinated the accounting, legal, commercial and technical due diligence teams in the transaction.
The acquisition was completed in a very short timeframe on 3 February 2000, only one month after the offer was agreed.