DigiSource USA, Inc.
Fort Worth, Texas
has been acquired by
Fidelis Capital Partners
Capital Alliance Corporation initiated
this transaction and assisted in its closing.
DigiSource USA, Inc.
DigiSource USA, Inc. provided testing, assembly, and kitting services for mobile electronic devices in North America. With the aid of Capital Alliance, DigiSource’s Irish parent company sold the business to Fidelis Capital Partners, with additional funding provided by RWH Group.
DigiSource was the only U.S.-based operation of its Irish parent company, and was the last of several sister companies throughout the world to be liquidated. While profitable and growing, DigiSource required additional resources to diversify its customer base. The company’s entire service commitment served a single Fortune 100 business, with a contract containing very short-term cancellation clauses. When its parent company chose to liquidate its investment, it contacted IBI Corporate Finance in Dublin. IBI is a Capital Alliance partner through an active worldwide M&A International network, and IBI approached Capital Alliance to lead the effort.
Selling potential acquirers on a company with only one customer presented a distinct challenge. Following an extensive screening of domestic and international acquirers, Capital Alliance connected with a unique private equity group eager to enter into the third party logistics space. Capital Alliance positioned DigiSource as a business prepared for expansion, and with a flagship customer already committed, one whose growth would be financially well-supported.
Discussions between Fidelis Capital and DigiSource were highly favorable, with each anticipating a mutually beneficial business relationship. These discussions created enough confidence for the acquirer to make a generous offer for the company. With this in mind, and perceiving that Fidelis Capital had emotionally committed to the acquisition, Capital Alliance negotiated forcefully despite a lack of competitive bidders.
The selling shareholders insisted on a “stock sale” and aggressive terms. Capital Alliance negotiated a significant cash down payment and subsequent monthly distributions based on a percentage of gross profits. Through a creatively structured stock sale, Capital Alliance eliminated the local and international tax burden for the sellers.