Phaidon International

Deal summary

Phaidon International is a market leading, contingent search recruitment business. Its primary focus is the provision of mid-level science, technology, engineering and maths staff (the "STEM" sector). The company has developed a best-in-class business model through hiring, motivating and promoting ambitious graduates in a structured and highly measured, performance-driven environment.

Started by Adam Buck in 2004, the business has been grown organically to date, with the majority of the senior staff having been promoted internally to a point today where there are 300 staff located in offices around the world.

The shareholder group approached Catalyst looking for solutions to the new challenges facing the business: the existing Enterprise Management Incentives (EMI) scheme was no longer fit for purpose as staff numbers had risen above the 250 maximum permitted, incoming senior management required equity incentivisation and the founding team members were looking to realise part of their value.

What difference did we make?

The first step was to ensure that we understood the key goals and priorities of the shareholder group as a whole. We analysed the range of solutions available including trade options, a possible debt-only solution and a private equity investment, and ran these processes in parallel due to concerns over possible changes to tax legislation. To ensure risk to the shareholders was minimised, we ran a compressed timetable in line with the tax year-end to mitigate any possible risk of a change to tax legislation.

After initial discussions with trade, debt funders and private equity, it became clear that a debt-only solution was the most cost effective option and, more importantly, would allow the maximum amount of equity to be retained by those working in the business. The founding shareholders had always shared equity amongst the highest performing staff and those who helped grow value in the business and they were keen to continue this. A debt transaction would lead to the lowest level of equity dilution and ensure as much equity as possible was available to reward those driving the growth of the business.

A select group of potential funding partners including banks and debt funds were approached and competitive tension maintained. After reviewing the offers, we advised the shareholders that their best option lay with a clearing bank and debt fund combination. Terms were negotiated for a package from Muzinich and Co. and HSBC.

The investment has enabled Phaidon to continue its global expansion, diversify into new markets and territories and, importantly, widen the employee shareholder base, as well as allowing the shareholders to realise some of the value they had created in the business.

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What our client said
"Catalyst were excellent from start to finish. They knew the market and really delivered with the funding solutions. Their level of input across the deal process was hugely valuable – we wouldn’t hesitate to use them again." Adam Buck
CEO, Phaidon International