Be Prepared! And Other Lessons Learned from Our Sale to K3 Capital plc | Knight

Be Prepared! And Other Lessons Learned from Our Sale to K3 Capital plc

Twelve months ago, Knight Corporate Finance joined K3 Capital Group plc, the leading M&A financial advisor in the UK by deal volume.

In this interview, Adam Zoldan, Co-founder of Knight Corporate Finance talks surprise deals, founder emotional fallout, and why becoming part of K3 Capital Group has been such a positive experience, especially for clients.


What’s the story behind the K3 Capital acquisition? How did that come about?


For many of our clients, it’s fairly common for them to receive letters, emails and phone calls from companies that are interested in acquiring their business, attracted by the ‘as a service’ recurring customer and revenue model. Since we are not blessed with contracted recurring customers at Knight, these approaches are rare.


So when the call came from K3, we were simultaneously intrigued and felt the timing was not right for us. The market for deals was booming, we were well ahead of our business plan and we had just launched Knight Transaction Services, our sister company that specialises in due diligence and deal support. We weren’t thinking about a sale. But we’re also used to making things happen, and an approach from a known and credible buyer is always worthy of discussion.


During the call, we were able to articulate our thoughts around timing, and left the call satisfied that we had developed a good new relationship and a potential option for the future. Interestingly, a few days later, an offer arrived by email that addressed every concern we had raised. While not perfect, it was clear that K3 was serious, had done their research, and had made a real effort to address our concerns. That caught our attention. A few days later with plenty of back and forth, we signed terms –  and completed just six weeks later.


Did you have a plan for exit, or did this deal catch you on the back foot?


As shareholders, we have always discussed our exit options and had plans in place. But even though we knew what we wanted to achieve, this was a really interesting experience for us, wondering if we were making the right decision and whether we were sufficiently prepared. We were trying to think of what could go wrong, when would we tell our team?  We have a strong family culture at Knight and were very nervous about informing our people.


Obviously, we wanted to ensure our people were treated fairly, so, as part of the deal, we negotiated the continued independence of Knight and a good share-based incentive for the team. Thankfully this was received well and the team appeared truly pleased for us – which was pretty humbling and very much appreciated!


What was the most surprising aspect of the deal?


The emotional side was stronger than I expected. Despite the numbers stacking up, despite everything making good, rational sense, I went through the whole rollercoaster of emotions – pride, sadness, anxiety, a sense of loss. Was I ready to sell our baby, born in a café in Euston, that had blossomed into the most fulfilling, satisfying and enjoyable time at work and in my personal life? It was then when I realised that I was living the life of our clients. We were experiencing first-hand, life in our clients’ shoes.


As part of the deal, we committed ourselves for a minimum of five years with an earn-out. This sale structure is not something we would necessarily recommend to our clients, since it would not make everyone happy, but it suited us. We have plenty left to give to the business and big plans for the future that we want to see through to fruition…..and get paid for!


What has changed for Knight in the last year?


From the outside, nothing has changed. We’ve had the most successful 12 months in Knight’s history and Knight Transaction Services has had a storming first year. Internally, we’ve had to adapt: our reporting has improved to meet the requirements of a PLC and I personally have had to come to terms with requesting time off for holiday and having my expenses approved.


From a client services perspective, we genuinely underestimated the benefits of being part of a larger group. We now have access to a superb tax team and can draw on relationships from the wider group that has introduced new buyers and a plethora of private equity houses that are interested in our deals. K3 sells more companies than any other adviser in the UK – over 300 in the last 12 months. They have some great technology that allows us to filter and introduce their relevant deals to parties looking to make their first foray into the world of acquisitions.


However, the main plus point is that we work with good, decent and professional people that have continued to back and invest in Knight, so we can continue to enjoy our work and deliver exceptional results for our clients. That was the essence of the deal that we agreed 12 months ago.


What are the big takeaways you learned from Knight’s deal with K3 Capital? 


Being prepared was key; this is the advice I’ve given in pretty much every presentation, press release and article that I’ve written.


On the deal, taking a commercial view enabled the deal to complete quickly and generated valuable goodwill which has been maintained to date.  I gained a lot of insight into the emotional aspect of the deal and the uncertainty our clients’ experience – I now have a lot more empathy here!


The key point  – as many of our clients tell me – is that  “people buy from people”. It is the strong and positive relationships that we have developed with our acquirer across the K3 group that has really made the deal work.