Enterprise Social Network

The Company

This enterprise social network was co-founded in 2008 by former PayPal executives in San Francisco. The aim was to create a secure social network that concentrates entirely on business, allowing colleagues to communicate, collaborate on projects and share documents across a secure platform.

The Business Challenge

The company’s leadership had ambitious plans for growth and quickly reached the point where an overseas base was necessary. In 2010, the Company decided to expand internationally and identified London as the appropriate destination for their European base. In readiness for this exciting new stage in the business lifecycle, the Company needed an experienced Controller to run the rapidly growing accounting function at HQ and sought out a CPA with a distinguished history of acting for fast growing Silicon Valley companies.

As their new Financial Controller implemented a range of procedures and a global accounting system, he knew that the UK setup was crucial to the business objectives and was acutely aware of how fast things were moving. All targets and forecasts were being surpassed well ahead of time and any advisor looking to work with the company would have to cope with the challenge of such a uniquely dynamic organisation. They needed more than an adviser – they needed a partner in Europe to help stay ahead of the financial, legal and HR issues that would inevitably and urgently arise over the coming months. Not long after joining, and at a time when the executive team were talking to various UK advisors, the Controller suggested us, having worked with us earlier in his career. He commented:

“I have worked with fast paced global software companies in the Bay Area for most of my career and I know how complicated things can get overseas. We needed an adviser that would be able to scale up services as the European operation grew, whilst also having the technical ability to keep us one step ahead of the complicated European rules on topics such as tax and employment law. I had done this before for other companies but it seems as soon as you learn something, they change it!”

We started to act in late 2010 and, as predicted by the Controller at the outset, it soon became clear that the company was destined for an exciting future.

The Solution

We needed to act fast and provide a wide range of expertise. In a challenging first few months we helped with:

• Company law, company secretarial matters and filings
• Employment law and drafting contracts for the initial senior hires
• Immigration issues
• Transfer pricing
• Recommending and implementing appropriate benefits plans for international staff
• International stock option plans
• VAT registration and compliance, PAYE registration and compliance, identifying a broker for Employer Liability Insurance
• Advice in relation to expansion into mainland European territories

In addition, when the company entered Australia shortly after the UK Company went “live”, the Controller turned to our international network to find an advisor that would be able to help in that country too.

By the end of 2011, the company’s UK headcount was growing (and they were still recruiting – fast!). We were frequently involved in helping both the US and UK executive teams keep on top of a range of short term and medium term challenges.

During 2012, the company’s growth in both the US and internationally moved up a gear. By June 2012 the team were getting used to new offices in the heart of London’s Tech City. We had adapted each service line as the business evolved, ensuring that the advice and solutions that were being provided remained relevant. Making use of our own San Francisco office, we were able to deliver a global HR study in relation to existing and anticipated countries in which the company was likely to recruit. This enabled the HR department to be as prepared as possible in advance of requests from the global sales teams to hire people in a wide range of countries. The business had also started to make corporate acquisitions internationally and, with the help of our tax department, those deals were completed and assimilated into the UK business efficiently.

As well as advising on the strategic, developing areas, we continued to help out with the ongoing compliance requirements, including preparation of the annual financial statements and dealing with the corporation tax filings.

Outcome

In June 2012, the company was acquired by Microsoft for $1.2bn, only 4 years after it had been founded. Thanks to the limitless energy, dedication and enthusiasm shown by the company’s team around the world, the investors achieved a liquidity event on preferable terms, significantly ahead of time. The effort put in by the Controller and his colleagues in San Francisco and the amazing success achieved by the General Manager for EMEA, and his team in London made this company the big tech success story of 2012:

“I think we did some amazing things and I’m proud of my part in that journey, but I know that success depends on many things. You guys feel less like advisers and more like friends that happen to know a lot of useful stuff! I am grateful to everyone for their support and help. The global payroll team has coped with everything we threw at them and having someone available in your US really gives you an extra angle.”

We are also proud of the company’s story and delighted that we were able to act for the business across a range of services in multiple jurisdictions, from the first day of European trade through to the sale of the Company. We also worked with their new owner on the transition of non-US operations and other post-acquisition filings that the Company was required to make.

If you are considering expanding overseas into Europe or further afield, please contact us, we have many years’ experience helping companies create a successful presence in the UK and beyond.