Situation
Credit Suisse First Boston (CSFB) owned a software and IT services subsidiary, Citymax Integrated Information Systems Ltd (Citymax), which had a leading position in providing securities, trading and portfolio management software systems and services to CSFB and many other London-based brokerage houses and securities firms. In conjunction with a major restructuring programme in late 1996, the CSFB board considered Citymax to be a non-core business. As such, the board decided to divest the business and appointed ARC Associates to advise it on the sale.
Approach
CSFB restructured Citymax for divestment, in a process which included the transferral of a number of personnel and contracts from Citymax to CSFB's core businesses. ARC Associates valued the remaining Citymax business, prepared the business plan and information memorandum, briefed the management team about the divestiture process and approached many of the leading IT and software companies in Europe and the US that had an interest in the financial services sector. After initial discussions, ARC Associates developed a shortlist of parties, arranged meetings, structured and managed the bidding process and led the negotiations of terms for the sale of Citymax.
The Transaction
CSFB agreed to sell its shareholding in Citymax to EDS for an undisclosed sum. The transaction was structured with an initial cash payment as well as discounts to be offered for on-going services provided by EDS/Citymax to CSFB over five years.