In an unusual deal, the principles of a prominent Fairfield County consulting firm reached an agreement in selling their company last year that could have it back in their hands by 2015 if a certain set of circumstances play out.
The owners of Peppers & Rogers Group received $15 million in November from TeleTech Holdings Inc. in return for selling an 80 percent stake in their company, with another $5 million payment due in March 2012.
As part of the deal, Peppers & Rogers management retained a 20 percent stake, with Teletech holding an option to buy those shares in 2015; and Peppers & Rogers management holding a conditional option to repurchase control of the company if Teletech does not exercise its own option.
As described in a Securities and Exchange Commission filing, the deal amounts to a money-back guarantee for management if TeleTech does not buy their remaining shares in a few years ”“ or put more precisely, an equity-back guarantee.
Based in Norwalk at the time of the acquisition, the company now lists its main address at 1111 Summer St. in Stamford. At last report, Peppers and Rogers had 130 employees spread across offices in Connecticut, Europe, the Middle East and South Africa.
At deadline, Don Peppers and Martha Rogers were traveling abroad and could not be reached for comment.
Founded in 1993, Peppers & Rogers Group consults on how companies can better reach and serve their customers ”“ for instance, a recent project involved helping a Belgian telecommunications company create a loyalty points program for residential and business customers. A company affiliate called 1to1media publishes business cases on the topic.
Englewood, Colo.-based TeleTech was founded in 1982 as a customer management call center company. It has since broadened its offerings to a range of business process outsourcing services, deriving some 10 percent of its revenue from subcontractor relationships with system integrators including Armonk, N.Y.-based IBM Corp.
Including results from Peppers & Rogers, TeleTech earned $11.3 million in the first three months of 2011 on $281 million in revenue, up 3 percent from a year ago.
If nothing else, the Peppers & Rogers deal appears to illustrate the leverage companies are regaining in the economic recovery. For the first time since the start of the recent recession, sellers appear to be able to dictate better terms for their companies. Corporations have their highest cash holdings ever on record, according to multiple reports. And with prospects for an economic recovery still uncertain, CEOs are looking to grow their top line by gobbling up smaller businesses.
That could represent a major opportunity for smaller family owned businesses or partnerships that, unable to get the price they were looking for, slogged through the recession ”“ in some cases picking up business jettisoned by larger companies that were restructuring.
Global mergers and acquisitions rose 22 percent last year, according to Thomson Reuters, which has offices in Stamford.
In the health care and technology industry alone, the dollars spent on mergers were up nearly two-thirds in the first quarter from a year earlier, according to Norwalk-based Irving Levin Associates, although the actual number of deals dropped by 8 percent.
