Business Context and Reporting Period
Evercore Partners Inc. filed this Form 8-K on June 7, 2011, to report the entry into a definitive agreement to acquire The Lexicon Partnership LLP, a U.K.-based limited liability partnership. The transaction is expected to close in the third quarter of 2011, subject to regulatory approvals.
Key Financial Metrics and Transaction Structure
The total purchase price for Lexicon is approximately £86 million. The consideration is structured as follows:
- Total Cash Consideration: Approximately £41 million.
- Total Equity Consideration: 2,200,612 shares of Evercore Class A common stock.
- Closing Payment: £32 million in cash and 317,119 Class A shares (subject to transfer restrictions until June 30, 2012, or the first secondary offering).
- Deferred Payment: £9 million in cash and 1,883,493 Class A shares, vesting in installments over four years beginning June 30, 2012.
- Debt Repayment: Evercore will fund the repayment of £5 million in outstanding Lexicon capital notes at closing.
The filing does not provide specific revenue, profit, cash flow, or margin data for Evercore or Lexicon.
Material Changes and Strategic Impact
This acquisition represents a material expansion of Evercore's European advisory capabilities. Upon completion, Andrew Sibbald, Senior Partner of Lexicon, is expected to become the CEO of Evercore's European Advisory business and join the management committee. The transaction involves unregistered sales of equity securities exempt under Section 4(2) of the Securities Act of 1933.
Outlook, Risks, and Contingencies
Regulatory Conditions: Closing is contingent upon approvals from the U.K. Financial Services Authority, the Financial Industry Regulatory Authority, and the Hong Kong Securities and Futures Commission.
Termination: The agreement automatically terminates if the acquisition is not completed by December 31, 2011, unless extended by mutual agreement. It cannot be terminated due to a material adverse change.
Forward-Looking Statements: The anticipated earnings impact depends on Lexicon achieving projected growth levels. Actual results may differ materially due to risks outlined in Evercore's 2010 Form 10-K and subsequent 10-Q filings.
Investor Verification Checklist
- Confirm receipt of all required regulatory approvals from the U.K., U.S., and Hong Kong authorities.
- Monitor the closing timeline to ensure completion occurs before the December 31, 2011, automatic termination date.
- Review the vesting schedule and acceleration clauses for the deferred equity and cash consideration.
- Assess the integration of Lexicon's operations and the retention of key personnel, specifically Andrew Sibbald.
- Verify the impact of the £5 million debt repayment on Lexicon's balance sheet at closing.