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Case Study

Union Four Electronics Limited acquired by OSI Systems Inc.

MANUFACTURING SECTOR • FEBRUARY 2016

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Following a sustained and rapid growth over a number of years the Shareholders of Union Four Electronics Limited recognised that their organisation was reaching a level at which it was strategically important for them to partner with a larger organisation in order to capitalise on the growth opportunities available to it.

Leith M&A were appointed as exclusive advisors to the shareholders of Union Four Electronics Limited owing to our approachable and direct way of working.

David Nelson, Managing Director at Leith engaged with the Joint Managing Directors of Union Four Electronics Limited to conduct a full commercial audit of the Company, prepare the Company for sale and formulate a strategy for the sale process.

Once complete the research team at Leith M&A developed and prepared confidential teaser documents and a thorough information memorandum document for distribution to potential suitors. The researchers and analysts mapped the international market of potential acquirers of Union Four Electronics and identified a target list of prospective trade and strategic acquirers. The team also mapped the equity investor markets, including identifying potential acquirers in the private equity, family office and venture capital markets.

Following the completion and approval of the sale documents and research process, the research team at Leith M&A then confidentially approached the approved potential acquirers for Union Four Electronics and presented the opportunity. Over several months the list of potential targets was refined and narrowed until Leith M&A and the Shareholders at Union Four Electronics elected to pursue the interest shown by a small number of suitors.

The next stage of the process involved numerous meetings between the potential suitors and the Shareholders of Union Four Electronics which were chaired by David Nelson. During this stage of the process Leith M&A were able to attract a number of competing bids for Union Four Electronics and it became clear that of all the suitors, OSI Systems INC. were in the strongest position to conclude the deal. The Shareholders of Union Four Electronics then elected to offer OSI Systems INC. a period of exclusivity to complete the deal.

Leith M&A then advised the Shareholders of Union Four Electronics Limited on the appointment of their legal representatives and in this case they elected to engage the services of Downs Solicitors LLP.

David Nelson then worked with the Shareholders of Union Four Electronics, their accountants and their solicitors throughout the due diligence process whilst maintaining close contact with the internal and external representatives of OSI Systems INC. As the process moved to the preparation, negotiation and agreement of the share purchase agreement, David remained the principle point of contact between the vendors and the buyers working to facilitate a smooth path to the eventual completion of the deal.

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What challenges arose? How did you navigate them?

As with any cross-border transaction, negotiations and the general management of the process itself can often be difficult. The expectations of both parties in respect of the speed of the deal and timescales must be managed in the face of differing time zones, cultures and styles. All such problems can be overcome with a willingness to compromise, negotiate and suffer some late nights and early mornings on both sides of the Atlantic.

The differences between publicly traded multi-national companies and mid-market, single site domestic companies are substantial not least in terms of resources, processes and experience but also in terms of the chain of decision making. As such there were many challenges to overcome but ultimately these challenges were countered in equal measure by a willing buyer, a willing seller and dedicated advisory teams.

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Leith Mergers & Acquisitions is a family-run business based in Dorking, Surrey. We work with only a handful of clients at any given time, allowing us to provide a personal, proactive and intensive service. We pride ourselves on our ability to deeply understand your needs and motivations in order to secure the future you are aiming for.

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