You can never be too prepared, says CFO Adri Führi about her first deal


CFO Adri Führi unpacks the two years of planning that went into e4’s recent acquisition.

One of South Africa’s leading fintech specialists, e4, announced its acquisition by a consortium of private equity investors in May. However, group CFO Adri Führi reveals that they’ve been expecting a transaction for quite some time, as a significant majority of shares in the group were private equity-held before the sale of the consortium.

“Where a limited-term fund is involved, the investment period is generally between five and seven years, so we knew that after the acquisition in 2016, we were going to be sold between 2021 and 2023,” she explains.

That’s how it all started…

Building Rome

Adri joined e4 in March 2017, a year after its previous private equity acquisition, and until then had never been involved in a corporate transaction. “It’s something I embraced gladly, because it’s really good experience for a CFO to get involved in something of this nature,” she says.

She adds that she was lucky that one of the senior members of her finance team had been involved in a transaction previously and already had a good understanding of the information they needed to consider as they prepared for the eventual sale.

“There’s so much information required for a transaction of this nature, because you’re selling an entire business to someone that might not previously have worked with the company or within the fintech sector,” Adri explains.

It was also important to find a partner that would be able to support the strategy of the business.

“When we first started considering the sale of the business in 2021, during Covid-19, there was an incredible appetite for tech businesses internationally.”

Since it’s a software as a service (SaaS) business at its heart, the e4 shareholders believed that it would be a good opportunity to offer the organisation to a global market at the time.

They brought in advisers to assist them throughout the process, including appointing M&A specialists to perform due diligence assessments. Adri explains that the goal was to enable the company to be assessed by one provider, limiting the potential risk of a number of potential buyers wanting to assess the company with their own suppliers at the same time.

“It was an interesting experience. When you’re preparing for a global deal you have to look at it in a whole new light, because different countries have different requirements when dealing with these kinds of transactions,” she adds.

At the end of 2021, it became evident that numerous South African macro-economic indicators were proving to be material obstacles for the international market to navigate. “Although there had been a lot of interest from international investors from a number of countries, the business has historically been focused mostly on South Africa, with the UK business only now starting to gain traction. Because of the high quantity of trade at the time in fintech companies in those countries, the potential offshore investors preferred to invest in companies closer to home rather than looking at a business in a jurisdiction that’s considered to be high risk due to economic and political variables risks,” Adri says.

Looking inward

To support the requirements of the deal, the finance team had to re-consolidate the company’s financials in order to have relevant comparatives for potential investors. “The information had to be provided on a monthly basis, for a five-year period going back, as well as a five-year period looking ahead. So we were required to compile 10 years of monthly data within a financial model that provided sufficient depth to potential investors to assist them in their decision-making,” she explains.

Shifting from a global market to South Africa resulted in increased pressure on the organisation as it extended the period of the pre-deal preparation by a year, Adri adds. “The problem with a deal of this size is that you can’t delegate the work to junior staff, so there was a lot of pressure on the senior members of the finance team.”

With only 200 people in the e4 group, and the finance team only making up a small portion of that, it was all hands on deck.

“At one stage it seemed like it was never going to end. As a finance professional, I like to be prepared for whatever comes. Throughout this process, as I continued to prepare for the next step, the goalposts kept on moving, and this resulted in additional hours having to be committed.”

However, one of the great things about working at e4 is that everyone works together, she says: “There was a lot of support from everyone, and it was great to see how the team’s strengths came to the fore and how much they learned throughout the process.

“It’s that internal drive to succeed as a unit that enabled us to successfully deliver this deal over a two-year period.”

What happens now?

With the deal concluded, e4 now has new private equity shareholders, which include Infinite Partners and 27four.

“There are three components from a financial perspective that need to be finalised in the next couple of months,” she says. “Firstly the accounting entries associated with the transaction and audit of these by the external auditors. Second, with a new lending structure, and with our first measurement period ending mid-July, we also have to make sure that we’re adequately prepared for the reporting required. And third, is to build a relationship with the new shareholders of the organisation and to ensure that we are able to meet their requirements.”

She adds that they are in the process of compiling a 180-day plan with shareholders as well, which will ensure that THEY understand the requirements of shareholders within that time frame. “The plan is going to be very instrumental in building good relationships with our new shareholders.

“A large portion of the management that were previously on a long-term incentive scheme have now invested in shares within the group as well,” Adri says. This will be managed through a management trust, which is another first for Adri.

Now she and her team have to bed all their hard work down.

Taking on exponential growth

Adri explains that sometimes when private equity houses are looking for investments they won’t generally buy a group that’s already gone through a private equity cycle, because there’s a perception that the previous owners would have extracted all the value from the business.

“We’re fortunate, however, that it wasn’t the case with our previous owners, who kept on investing in the business, and our new owners have a similar strategy to grow the business,” she adds.

In 2021, e4UK was launched with a focus on building relationships with mortgage lenders, conveyancing firms and other partners in the country. This will provide the shareholders with additional global opportunities.

“e4 has been on a successful growth trajectory over the last five years,” Adri says. “The partnership comes at an opportune time for the business as we continue to improve relationships, diversify revenue streams and expand into new geographies.”

She adds that the consortium’s diversified portfolio mix and investor profile present an exciting opportunity to unlock synergies, target closer strategic relationships and partner more effectively. “Alongside these, we also see value in leveraging the many years of organisational expertise and experience within the consortium to improve how we continue our growth trajectory in a sustainable, exponential way.”

Leveraging lessons

With inevitable growth on e4’s horizon, Adri is already thinking ahead, by considering how she can leverage the lessons from her first deal.

“I learned to ask questions differently,” she says. “When you’ve never been involved in a deal like this before, you are provided with requests for information, but when you provide the information, there can also be significant additional information requirements, which then requires rework. I think knowledge of a process is important as it enables you to more effectively manage through the process.”

Adri adds that she would also like to engage M&A modelling experts to clearly define robust models that would meet the company’s objectives during the course of the deal. “We only considered this towards the end of the process for this deal, but it was too late to make any significant impact.”

She would also like to keep on building additional skills in her team and to continue growing the number of senior team members that can help with these kinds of processes.

“If you have a small team, there’s a lot of reliance on a few people. So you have to make sure you have the right people, with the right experience, to support the organisation,” Adri concludes.

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