Case Study six – Cleansorb Limited (Cleansorb) (www.cleansorb.com) acquired by Newpark Resources Inc. (Newpark) (www.newpark.com)

Cleansorb is an innovative reservoir chemistry company providing operators with chemical reservoir treatments for field development and production applications. Initial contact was made between Leith M&A and Cleansorb in the autumn of 2016 following previous marketing campaigns by Leith M&A spanning as far back to 2012, information from which the shareholders had kept on file. When the time then came to consider exiting their Company, they contacted Leith M&A to discuss our services.

The time came in May 2016, when shareholders Ralph Harris and Ian McKay were speculatively approached by a potential acquirer asking if they were interested in selling Cleansorb. The enquiring company had offered an unacceptable valuation to Ralph and Ian but had got the ball rolling in their minds as to the possibility of marketing Cleansorb and planning for their exit ahead of retirement.

Ralph Harris commented about the shareholders’ decision to use Leith as their M & A advisor, “Leith M&A was local and had already been in contact with us to make us aware of their services, so we had some preliminary discussions. David (David Nelson, Managing Director at Leith M&A) outlined a typical sale process, buyer expectations, steps we could take to make our business more sale-ready and how an M&A advisor could assist in the process.”

This case study demonstrates the, at times, long-tail nature of the business sales process; once the introduction and initial meeting had taken place with David, Ian and Ralph continued to grow their company over the next two years in order to fully capitalise on any acquisition offer and maximise their company value when the time came.

Ralph Harris comments further, “Following a period of further revenue growth, we were contacted by a more serious potential buyer and decided to use Leith M&A as our advisor.”

Whilst some of Leith’s sell-side clients have some inkling of who their acquirer may be, many do not and require the complete research process whereby our team use specific criteria to search for a cohort of potential buyers for their company. In the case of Cleansorb’s sale, the shareholders were again contacted in 2018 by a potential buyer, Newpark and this time were more impressed with the suitability of the enquiring party.

Newpark, headquartered in Texas, were keen to acquire a UK based developer of oilfield chemical technologies in order to complement their portfolio of services. Ralph and Ian were interested in pursuing this approach and recruited the services of Leith to handle the transaction.

This sale was slightly less straight forward than some as it was a transatlantic deal with major participants communicating between the US and the UK. In addition, Newpark had detailed regulatory and compliance procedures to follow, as a company listed on the NYSE. Throughout the due diligence process, David and the team at Leith, co-ordinated the flow of information and smooth running of the discussions in order to minimise the stresses and disruption to our clients.

The shareholders of Cleansorb comment about David’s involvement,

“David was always polite and measured. He articulated our position and represented our shareholder interests very well during the negotiations which included an extended period of due diligence. He communicated well with the buyer and helped us to fully understand their position on a number of matters. With his assistance, we eventually arrived at a deal that was acceptable to both sides.”

The deal completed successfully in October 2019 for an undisclosed sum. Exact details of the transaction value will remain undisclosed, but we are able to confirm that the deal was a 100% share sale.

Managing Director of Leith, David Nelson said: “This is an exceptional deal for all Stakeholders in Cleansorb Limited and Newpark Resources, Inc. The future looks bright for the Company and its many customers and we are delighted to have played a part in the continued success of the business.”