We had been contacted by the four founders of a chain of 40 mobile phone stores across Romania. Their business was becoming increasingly difficult, with decreasing margins and sales. The industry was undergoing a major change, that of big consolidation and major mobile operators expanding more into retailing, via their own networks of stores.
The owners were clearly no longer the right owners of their business, especially as they did not have the resources to compete in this market. Since they could not expand fast and be ahead of the game, we agreed that the business needed to be sold. The potential buyers for such a business were not that many. Potential buyers could have been another network of stores that had enough money to further expand, or one of the mobile phone operators.
We approached all of the above and received interest from an independent network, backed by a private equity fund and from Germanos Telecom Romania, the largest retailer of mobile telephony in Romania.
Germanos made an initial offer, which was consequently improved, following our input during the negotiation process. The due diligence was pretty quick, since all the stores would have been transformed into Germanos stores, and the operations of the current company were not of much significance. The most important part of the takeover process was the renegotiation of the rental agreements for each store, which had been completed by the business sellers. Once the tax advisors designed the most efficient scheme for this transaction, it went smoothly to completion.
Germanos Telecom Romania is part of Cosmote Group, the largest mobile phone operator in the Balkans. Germanos Group is the largest mobile telephone operator in the region, with more than 800 stores in Greece, Romania, Bulgaria and the former Yugoslav countries. It is part of the Greek OTE Group.