Archive April 2016

MBOs Part 3 – Funding

Quite often, a management team will not be in a position to finance a transaction themselves; lending in one guise or another will therefore be a common feature of a deal; the question will be what form should that take; on one particular deal, we had to cover not just bank funding, but also borrowing against the company’s invoices, smaller investors that had agreed to put in private funds and even a sale and lease-back of assets with a commercial lender, to help raise sufficient cash to do the deal!

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MBOs Part 2 – The Challenges

One of the biggest challenges relates to the time and commitment required by the MBO team; the deal requires significant input from the key members of the team, but the business and their existing roles as employees are in no way diminished; and indeed failing to look after the interests of the target company during the deal process can act as a double-edged sword; they clearly do not want to buy a weakened business, as a result of taking their eyes off the main focus of their usual day jobs. 

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MBOs Part 1 – Selling the company: Is it better the Devil you know?

When it comes to selling your business, whether to move on to a new project, to divest some non-core elements of an existing business or with an intention to retire, a keen management team might prove a better prospect, via a management buy-out (MBO), than a trade sale to a competitor, particularly for the longevity of the business, going forward.

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