Successful M&A requires connection, but it doesn’t have to be face to face

We’ve all seen during the pandemic how hard it is to replace the connections made by in-person meetings. However, a business can still do as much, if not more, via remote contact than anyone would ever have believed possible before March 2020. Indeed, at my company virtual working has revolutionised the way we carry out many of our business practices, including mergers and acquisitions (M&A).

On December 4, 2020, Speed Fibre Group, an Irish investment vehicle focused on telecoms infrastructure and communications services, acquired Magnet Networks, a retail service provider operating Ireland’s largest connectivity network. On the face of it, this was a straightforward business transaction, yet because the acquisition was planned and completed entirely virtually during the height of the Covid-19 disruption, it was anything but.

All negotiations, due diligence, contract logistics, transaction closing and post-merger integration took place remotely. In fact, several of our key contributors and advisers only ever met virtually and still haven’t had the chance to meet in real life.

Speed Fibre Group is owned by the Irish Infrastructure Fund (IIF) which invests and manages capital for 20 institutional investors, 18 of which are Irish pension funds, trusts, and investment managers. To date, the IIF controls over €500m of investments across energy, telecoms, tourism and healthcare in Ireland. The business portfolio consists of Enet, a wholesale telecoms operator; Airspeed Telecom, a retail service provider offering connectivity and ancillary services directly to businesses; and now Magnet Networks.

We spent early 2020 identifying acquisition targets were on track when Covid took hold in March. However, instead of letting it derail our plans, it fortified our commitment to our strategy. Once we conducted a full assessment of the potential impacts of Covid on our economy, our sector and our customers, we realised that the pandemic would lead to an increased reliance on broadband services and would provide immense opportunity for our business. This detailed review provided us with the confidence to execute our plans despite the uncertain market conditions. This confidence was anchored by our level of preparedness as a business. Speed Fibre Group operates a three-year rolling plan which is updated every year, so we always have a very clear picture of how an acquisition will fit into our business strategy. The fact that financing options were already in place and ready to be accessed also assisted in our decision process.

We had identified Magnet Networks as a potential acquisition opportunity in 2019. The company, which has 74 employees, focuses on the business market and provides innovative telecommunications and data connectivity solutions to approximately 7,000 business customers, including some of the world’s biggest technology companies. In addition to a residential base of more than 4,000 customers, Magnet also owns and has access to duct and fibre networks in key locations and owns a ‘Fibre to the Home’ network which directly passes almost 12,500 homes. This potential investment presented a very favourable growth opportunity for Speed Fibre Group as it would increase our wholesale footprint both materially and financially, while also developing the scale and depth of our retail B2B division.

Magnet already had a range of innovations in the area of remote working and customer service. The acquisition will enable these to reach an even larger segment of the business community nationwide. A range of new products such as the launch of SD-WAN are also now on the cards.

The key challenge to making this all happen was having to conduct all activity virtually. Typically, this work requires multiple face-to-face meetings, long hours camped out in meeting rooms, copious amounts of coffee and often jumping on a plane at very short notice. While the intensity of the M&A process remained similar, the pandemic’s forced migration to video communications platforms and the full exploitation of online tools taught us that it’s possible to do so much more remotely than we would ever have thought possible.

Posted on on June 07

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