Insight Bite

We are all familiar with press releases announcing M&A deals, however these PRs rarely reveal the intricacies of the transaction; neither do they consider the main parties’ motivations. In our new Exit Insight series, we examine in more detail what lies behind a technology M&A deal.

On 1 February 2017 Telia Company proudly announced the completion of their strategic acquisition of IoT innovator Fält Communications AB (“Fältcom”). Acuity’s Richard Baker advised Fältcom throughout the exit process in a deal that highlighted Acuity’s market-leading track record in the IoT sector.

Why did Acuity want to work with Fältcom?

Much is debated about the ongoing trajectory of the Internet of Things. A large part of the industry is still somewhat embryonic in terms of commercial traction. Whilst numerous IoT businessesare sub-scale there are notable breakout companies such as Fältcom, a mid-market IoT specialist which has quickly developed significant market presence.

As they develop, IoT companies typically reach a fork in the road whereby they must choose to follow a horizontal model or go down the vertically specialised route.

Fältcom chose the vertically specialised route and focused on markets that had a real need for their robust, ultra-secure solutions and benefited from their eco-system of focused applications. The company was able to build momentum with key customers including as NYCDOT (in the New York Smart City Program), Volvo, Bentley and Nobina. By 2016, the company had deployed over 40,000 connected devices. This enabled Fältcom to further hone and develop additional software applications that were not only scalable and addressed key market pain points, but also added significant value in providing further business intelligence, efficiencies and insights to their customers.

In short, this traction drove the technology platform towards global deployment and we quickly identified that Fältcom was a very desirable company from an M&A perspective. Therefore, we were motivated to be appointed as Fältcom’s advisors. We are passionate about working with the best European companies across IoT and we were impressed and inspired by Fältcom’s strategic potential in terms of their team, capability, reach and market proposition.

What was the background of the partnership between Fältcom and Acuity?

There has been an ongoing relationship between Acuity and SEB Venture Capital since 2014 when we sold Zinwave to McWane Technologies and then later in 2016 the sale of SP Devices to e2v plc. SEB Venture Capital introduced Acuity to Fältcom as a potential advisor and asked Acuity to pitch in a competitive process.

Why did Fältcom choose Acuity?

Acuity were chosen from a strong set of international Investment Banks for a number of reasons, but primarily the Board’s decision was based on our deep sector experience – this transaction would be the tenth IoT mandate under Acuity’s belt. With this experience came extensive and current access to international strategic buyers. We worked hard to build on our relationships and demonstrate our value, and invested heavily in the pitch process. All of this gave Fältcom’s Board the confidence to appoint us.

“We chose Acuity based on their track record across the IoT sector coupled with their global market access and network. Acuity’s approach, commitment and insight were key enablers in the sale to Telia Company, focused on supporting and complementing Fältcom’s strategies for further international expansion.” Per Anell, Industrifonden

Why did Telia buy Fältcom?

Throughout the smart city ecosystem every stakeholder is focusing their efforts on harnessing the massive potential of IoT across their entire infrastructure. There is therefore a growing need for trusted technology partners who can deliver secure, scalable and robust solutions.

The opportunity for Telia was to satisfy this demand, and own a real IoT deployment capability and to use disruptive emerging technology solutions to advance their strategic position. Telia could see numerous strategic angles to generate further scale and growth via Fältcom.

Indeed, Telia referenced their objective of “becoming the leading provider of smart public transport services whilst laying the foundation for expansion into smart transports and logistics and smart city spaces” as their overall rationale behind the acquisition.

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

It was imperative to accurately and insightfully present Fältcom’s technology, business and potential and we focused on enabling all buyer groups to understand Fältcom’s key points of sustainable differentiation. In particular, we wanted to highlight Fältcom’s technology, deep domain expertise and trusted provision of business-critical solutions, all combined with long-term contracted relationships.

Acuity delivered on the promise of global market access, and through the competitive dynamic and our negotiation expertise, we are proud to have achieved the optimal outcome for the shareholders. In terms of added value, the hands-on approach and strong working relationships we built with the shareholders and the wider Fältcom team enabled all to achieve their goals.

We had the pleasure of working on the transaction with Johan Larrson and Johan Matsson at Vinge, who represented Fältcom, and Lindahl who represented Telia Company.

It was imperative to accurately and insightfully present Fältcom’s technology, business and potential and we focused on enabling all buyer groups to understand Fältcom’s key points of sustainable differentiation.

And the result?

We see Fältcom’s exit process as a stand-out example of how an M&A deal in the IoT space should be executed and congratulate both the Fältcom team and Telia on completing this pivotal transaction.