Insight Bite

On 27 June 2017 Isotrak and VeriLocation announced a transformational transaction within the European Fleet and Telematics market. Acuity’s Richard Baker advised VeriLocation’s shareholders throughout a process, highlighting Acuity’s market-leading track record in the telematics, Fleet Management (FMS) and IoT sectors.

Here, Richard talks to Kelly Horner…

Why did Acuity want to work with VeriLocation?

We have built a very strong track record across the wider Internet of Things (“IoT”) space with a focus on working with the best companies in each subsector. From the intitial meeting we were really impressed with CEO Andrew Overton, his team and what they have built at VeriLocation: a self-funded SaaS platform built in-house with a great customer base, a simple, focused proposition and a track record in dynamic, agile development which continues to be at the forefront of market demands.

What was background of the partnership between VeriLocation and Acuity?

Andrew Overton and Richard Baker first met at an event several years ago. They were reconnected via Andrew’s legal advisors into a pitching process that the shareholders were running as they considered their strategic options. Andrew’s long-term legal team was firmly of the view that VeriLocation required an advisor with both deep sector expertise and a hands-on approach to all aspects of the process, in order to drive the optimal result.

Why did VeriLocation choose Acuity?

At our first meeting, there was a clear meeting of minds between the Acuity team and Andrew

At our initial meeting, there was a clear synergy between the Acuity team and Andrew. We had a strong rapport with the management team and felt that we would work well together. We believe this rapport, combined with our sector leading track record, our enviable success rate and a recommendation from Andrew’s trusted legal advisors, led to our appointment.

Why did Isotrak acquire VeriLocation?

Isotrak, backed by buy-and-build technology specialists Lyceum Capital, continually searches for complementary telematics acquisitions with a focus on technology, scale and a broadening of Isotrak’s capability.

VeriLocation met these requirements and more by offering a proprietary software platform utilising, for example, HTML5. The platform is scalable, flexible, modular and rich in capability, “a technology leader focused on both product innovation and customer service”, and agnostic in its integration with third party hardware (enabling flexibility in choice of hardware provider at any point). Other significant attractions were VeriLocation’s focused customer service, single instance cloud solution in development across the customer base, intuitive, simple dashboards providing rich data analytics and the modular offering i.e. the option to start simple and build in tune with fleet size and requirements.

VeriLocation’s market leading technology e.g. real-time integrated 3G cameras across multiple points, plus a shared ethos of meeting future customer demands through innovation and delivery and access to the SMB market from which VeriLocation had grown, confirmed the decision.

“The businesses are a perfect fit for each other and will give our customers the best available technologies on a single platform.” Jim Sumner, Chairman of Isotrak

Lyceum Capital’s Dan Adler, a non-executive director for Isotrak, said: “VeriLocation is a software business with complementary functionality to Isotrak’s services and we are committed to identifying, acquiring and integrating businesses that provide a strong strategic fit, across all our investments. We are certain that Isotrak will continue to build on its position as a market leader in the dynamic telematics space and will remain at the forefront of new product innovation.”

Talk us through the process itself, how did it go?

Our current understanding of market dynamics is that despite strong appetite from acquirers and investors, less than half of the telematics businesses being marketed in either Europe or the US have successfully completed a sale. Trading, technology integration, a reliance on hardware revenues and misalignment on valuation are all factors that have stopped deals from happening.

Two different events, in addition to these challenges, needed navigation during the process: the UK’s Brexit decision coupled with significant consolidation in the US FMS market, both of which took place during deal marketing in the summer of 2016

Two different events, in addition to these challenges, needed navigation during the process: the UK’s Brexit decision coupled with significant consolidation in the US FMS market, both of which took place during deal marketing in the summer of 2016

The challenge of Brexit was the uncertainty which played across the wider market and a view that fleet managers would slow down on any major purchasing decisions. Key to dealing with this perception – and to maintaining the momentum of the process – was providing proof that this uncertainty was short-lived; VeriLocation’s growth was being driven by conversion of a strong UK pipeline. By focusing on the right timetable and sharing a focused data set, we were able to demonstrate that VeriLocation’s momentum was continuing despite market headwinds. This was testament to the team’s proposition driving continued sales traction through discussions in the second half of 2016.

The US consolidation created a different challenge. Consolidators with a keen interest in Europe were disappearing one by one throughout the process (removing a number of hungry acquirers, for example, Verizon acquired both Telogis and Fleetmatics in the summer of 2016 for a combined $3.3bn). Acuity’s depth of global coverage across the sector ensured that multiple bidders were in play despite this further wave of consolidation taking parties out of play.

Acuity’s depth of global coverage across the sector ensured that multiple bidders were in play despite this further wave of consolidation taking parties out of play.

Having successfully navigated these challenges, we delivered a number of attractive options and against a backdrop of further strong trading, completed a deal in H1 2017.

The result?

The combined Isotrak and VeriLocation group will deliver on its promise to transform the UK market landscape in addition to expanding further into Europe and beyond. Andrew and Sue Overton, Duncan Philp and the team will be significant assets as part of Isotrak’s wider team as the group further develops their cloud platform which, coupled with market leading functionality and analytics, will continue to see the group win further market share and a broader set of both SMB and enterprise clients.

We have been privileged to work with the team in delivering on our promises of global market access, deep sector insight and hands on senior support throughout the transaction. We look forward to the opportunity to support the combined Isotrak and VeriLocation business in the future

Andrew Overton, CEO and co-founder of VeriLocation, commented: “Acuity were chosen to act as our advisor on the sale to Lyceum and have supported us fully along the way in terms of preparation, running a global sales process, deal structure and legals. Richard has proven to be a respected and knowledgeable partner in this detailed process and provided experience and support in all parts of the sale journey. I would fully recommend the Acuity team to technology entrepreneurs looking for sector-led M&A advice.”

Acuity Managing Partner Richard Baker said: “VeriLocation’s telematics platform and technology is at the forefront of the market with significant further growth potential. The combination with Isotrak will drive wide opportunities across both business, for both current and future customers. Andrew and the team have built a great business with the customer at its core and we have thoroughly enjoyed working with the team in finding the right partner to take VeriLocation forward.”

We worked closely on the transaction with EMW’s Corporate team (Nick Lloyd, Jeremy Eden and Sean Halliwell) who supported Andrew and the VeriLocation shareholders throughout the transaction. Osborne Clarke (Simon Spooner, Damocles Merry) acted as legal advisors to Isotrak.

This sale represents Acuity’s 11th European IoT project in the last 24 months, and is our second significant IoT strategic exit completed in the first half of 2017.