A management buyout occurs where the management team of a business acquire that business from its owner.
For vendors, the management buyout can sometimes represent the most viable exit route.
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The buyout is often relatively time consuming, complex in nature and there can be a number of unexpected developments as progress is made towards completion. It is therefore key to appoint corporate finance advisers who can lead you through and shoulder the burden of each stage of the transaction.
Typically we will lead all stages of the buyout, including:
- Establishing feasibility of the buyout, so that any offer put forward is sufficiently attractive from the vendor’s perspective, realistically priced, structured and fundable.
- Negotiating the main terms of the transaction with the vendor including price and structure
- Developing the business plan and financial forecasts in conjunction with the buyout team for submission to potential funders.
- Leading discussions and negotiations with potential funders so that the most appropriate funding offers are selected.
- Project managing the transaction to completion once the preferred funder(s) have been chosen.
Our input is key at the feasibility stage. We see many instances where vendors and buyout teams spend considerable time agreeing a transaction before we get involved, where the price or structure cannot be funded.
Vendor-initiated buyouts
Where it is most appropriate for vendors to exit via a sale to a management team, you may wish to consider a “vendor initiated” buyout. This enables vendors to control the deal to a greater extent.
