Clarification on related party transactions
We are making this release ahead of a live Interview our chairman Jeremy Harbour is giving on Sunday 7th August, to ensure that anything due to be covered in the interview has already been correctly communicated to the Market.
The focus of the interview is to discuss the role of the Private Equity Company ‘The Unity Group of Companies PTE Ltd’ based in Singapore and its related compnaies, in the activities of The Marketing Group PLC and the roles of the directors of The Marketing Group PLC in this Private equity firm.
Firstly by way of context, Unity Group is a Private equity firm owned and controlled by Jeremy Harbour there are Group companies in which Jeremy Harbour and Callum Laing are also involved separately or collectively, that are involved primarily in providing investment funds for transactions. Unity group is a team of 15 people involved in legal and financial roles.
Unity group is the originator of the Agglomeration model and financed the IPO of TMG plc.
Unity Group provides the following transaction related services.
1. Buying out or underwriting the buy out of minority shareholders from target acquisitions to ensure deals can happen 2. Covering legal costs on behalf of TMG including, tax options, legal opinions, stamp duties etc 3. Underwriting bank debt so that companies can be purchased debt free 4. Financial and legal Due diligence up to the standard prescribed by Nasdaq and the board of TMG 5. Settling introducer and agent fees in sourcing transactions 6. All expenses relating to negotiation, meeting and processing of deals whether successful or otherwise.
All of these costs and investments are not paid by TMG in cash, but are reflected as shareholdings in the companies that are acquired, these shareholdings belong to the corporate entities not Jeremy Harbour or Callum Laing personally, and they are locked up for a full 360 days. The share class are ordinary and no different to any other investor.
The deals presented to the board of TMG must adhere to our internal purchase criteria including overall value, we do not publish this criteria as it could hamper future negotiations. All deals are still analysed on their merits, all of our board are unsalaried and only have shares, so the goals of the board is very much aligned to drive shareholder value. Where we feel there is a conflict the conflicted parties abstain from voting. All companies joining have also been vetted and approved by the non executive board of company founders, before the vote by the executive board on their acquisition.
The advantage of this model is that TMG can lean on the experience and team of Unity Group, without the significant costs associated with running a full time M&A team, by using connected parties to finance deals, we can also move much faster, as securing external funding can normally take months, whereas Unity’s associated companies can agree terms same day in many cases.
This unique relationship means that TMG never carries any cost of sourcing and transacting deals, this is a major weakness for our competitors as they carry significant cost all the time whether they are doing deals or not.
The power of this relationship has been demonstrated by the ability to go from 4 companies to 13 in less than 2 months and a more than 6 fold increase in EBITDA. Our relentless focus on fundamental value is very much supported by this relationship, and we will seek to better communicate our plans in future press releases.
We look forward to many more transactions going forwards and to building shareholder value for all of our investors, founders and partners.