Completing a Management Buyout
“Opens doors to the right investors navigating negotiations with skill and integrity”
— Robert Bartlett, Chestertons CEO
Are you part of a management team that has been given the opportunity to buy your company? This is commonly known as a Management Buyout, or MBO, and is a process that our team can advise and support you on, to make sure you get the best terms for this deal.
Building your Business Plan
In the early stage of the process, our support focuses on exploring all the available types of financing and ownership structures on offer, before building a robust business plan and choosing a backer to negotiate the financial terms for you. Where business owners have already engaged a sale side advisor and found a buyer, we help management teams independently agree their own terms with the buyer.
Our intimate knowledge of the private equity and investor market over the last 20 years enables us to provide you with deep insights that can back you and your position and open up options when dealing with business owners.
Securing MBO Finance
As management teams often need to raise capital in order to complete a MBO, we will also structure a comprehensive financing package for you. This may include loan notes, bank debt, mezzanine finance and other forms of finance to support a compelling offer to the vendor, whilst ensuring the cost is not onerous on you, the management team.
Negotiating & Closing the Deal
Our M&A deal experience allows us to provide you with technical knowledge and tactics to negotiate optimal commercial terms and to determine how much existing equity to roll over, and how much equity and value you could ultimately receive at the next exit point. As we know the people behind these funds, we also share our views on softer factors, such as the reputation of the backer, as well as their approach and style of dealing with portfolio companies and the likely chemistry fit with you.
Throughout the MBO transaction, we provide clear and instructive advice and offer hands-on support for all your needs, including your financial modelling, business planning and presentation requirements, to make sure we impart the best impression with your potential backer .
Contact us
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FAQs
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Our team are senior level deal doers with hundreds of deals under their belt. We are the trusted advisor for many businesses and have helped to successfully build and execute numerous acquisitions. The seller of the business will want to extract as much value on exit and likely be speaking to multiple bidders or alternative exit options. We will can justify reducing the asking price or seeking terms to protect yourself without losing out to another bidder. We have worked with most of the major sell side advisors and can help navigate you through the process. We will be available to you the whole way throughout the transaction whether that is late at night or at the weekend whatever it takes to get the deal across the line.
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A merger is when two or more separate companies combine to form one new legal entity and most or all original shareholders remain invested in the new company. An acquisition, on the other hand, is when one company takes over control of another company and so the stakeholders of the acquired entity typically exit in exchange for cash or loan notes.
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As we help our clients to takeover businesses according to their strategic rationale, we have no specification or limit when it comes to the type of businesses we help to acquire.
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Due diligence usually involves a detailed report being prepared on the target company's financial and tax, IT, operational, market and commercial aspects. Due diligence is used by investors or buyers to ascertain if the potential target company is suitable for their needs. It helps ensure investors or buyers get the right price for the target, mitigate risk and maximise returns. Quite often, the target company may also request a due diligence report to help get themselves ready for a potential sale or fundraise
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Yes, we can certainly help you raise additional capital via debt or equity and advise you on the amount of funding that is likely to be available to you. This would be based on the value of your company, the target company, or both.
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This can depend on how well defined your strategic rationale is and whether your target company is ready to sell or not. Therefore, the initial stages of the M&A process, including identifying a suitable target, can take several months but once this stage has been completed, the closing of the deal can vary between 6 weeks and 6 months depending on complexity of the deal.
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Company valuations or an enterprise value ("EV") tend to be based off of a multiple of a financial metric. The most common metrics used to determine the earning potential of a business are multiples of EBITDA (earnings before interest, taxes, depreciation and amortisation), revenue and sometimes assets.
The multiple for a specific company is influenced by its sector, trading and value drivers and position of the business within that sector, as well as the buyer/investor appetite at that moment in time. Buyers will pay more for better quality of management, scalability, intellectual property, earnings track record, cash dynamics, and a lack of dependencies, for example. A buyer will also often pay over the odds if it represents a strategic play and is bidding in a tightly run competitive bidding process.
The EV of a business is shown on a net debt or cash basis. Any surplus cash or debt in the business will normally be negotiated with the buyer by analysing and agreeing the level of working capital, as well as other assets within the business.
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Whilst we have specific sector knowledge as a result of the different deals we’ve made happen, we work with many different sectors, so our experience remains very diverse. This naturally means we bring unique insights to our clients, helping them to create robust business plans and completing the deals they want.
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Our fees vary depending on the scope of the engagement. Our corporate finance related fees tend to have a large component which is based on the success of a transaction completing. Our strategy advice fees are normally charged as monthly retainer fees or charged on an ad hoc time basis. Our fees are always tailored to your specific needs, ensuring we are completely aligned.
A selection of brands our team have worked with
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