Management Buy-Outs
A Management Buy-Out (MBO) is the acquisition of a business by its existing management team from its current owner. A MBO often occurs where a parent company is looking to divest its interest in the business or where the owner of the business is looking to retire.
The key to the successful outcome of the MBO is the strength and quality of the management team, which is a major factor in raising the required funds to complete the transaction. If the MBO team has a shortage of a particular skill in the team, such as finance, they may bring in an outside MBI candidate to fill that gap and form a management buy-in/management buy-out (BIMBO).
Funding the MBO is typically a combination of a small input from the management team combined with bank debt and deferred consideration. The input from the management team, although relatively small in comparison to the overall deal size, is important as it shows the external lenders your commitment to the transaction. Venture capital is a further funding option particularly where there is a funding gap after considering the more typical sources of funding.
We can advise on all aspects of the transaction relieving the pressure on the management team.
Our services typically include:
- Performing a business valuation of the business in order to formulate an offer
- Negotiating the terms and structure of the transaction taking into consideration funding and other financial issues
- Preparing a detailed business plan and financial forecasts to assist in the raising of appropriate debt and/or venture capital funds
- Leading discussions and negotiations with potential funders to the transaction
- Performing appropriate financial and taxation due diligence
- Working with your solicitors to finalise the sale and purchase agreement and to complete the transaction within the required timescale
