Friheden Invests Exit af IC Companys

Abstract

The thesis at hand aims to analyse Friheden Invest’s forthcoming exit from IC Companys. Niels Martinsen, deputy chairman in IC Companys, still has the controlling interest in Friheden Invest, but has transferred the majority stake to his daughter, Emilie Martinsen. In conjunction with this, Friheden Invest revealed that Emilie Martinsen has no interest in IC Companys, and the 42,4% ownership will be sold when Niels Martinsen no longer is involved in IC Companys. Given Niels Martinsen’s age he will have to resign from the board of director’s within the next 4-5 years, where after the exit is expected to take place. The exit can first and foremost be done by selling the shares to the stock market, either through an on-going process or through a book-building process aimed at institutional investors. A sale to the stock market is deemed to involve a discount to the current share price, given the significant ownership percentage and illiquidity of the share. Furthermore, the sale of shares will disturb the historical balance between supply and demand, whereby the share price most likely will become depressed due to the increased float. This exit method is therefore rather unattractive for both Friheden Invest and the other shareholders, whereby an analysis of alternative exit methods is deemed relevant. Regarding alternative exit methods, the thesis includes a sale of IC Companys to both a financial and strategic buyer, although the main focus is placed on financial buyers. In order to assess IC Companys attractiveness to both financial and strategic buyers, a strategic and financial analysis is performed. With regards to IC Companys in a private equity setting, its attractiveness is evaluated through an estimation of IRR, which is based upon a LBO-model. The result is that IC Companys is barely an interesting LBO subject, and the attractiveness is dependent on several factors and assumptions. On the other hand, achievable synergy effects should rather easily allow a strategic buyer to match a financial buyer’s acquisition premium, at the very minimum. Therefore, a sale to a strategic buyer is established as the most valuable and likely exit method. The path towards a successful exit is very much aligned with the current development, and mainly involves an increase in profitability and more dispersed revenue. Thus, the achievement of a successful exit isn’t dependent on Niels Martinsen being able to influence the future development.