A management buyout is where the executive management of a business acquires it from the owners, typically (though not always), with backing from a private equity investor.
A management buyout can offer a management team an opportunity to take control of the business they are running, and to achieve financial reward far in excess of what they can earn as a salary. For most management teams, a chance to acquire the business they manage is likely to occur only once in a lifetime – so it is vital to get it right and give it the best chance of success.
From the seller’s viewpoint, management can represent an attractive acquirer, already familiar with the business.
Our Partners have advised numerous management teams on their buyouts, so have a great deal of experience and knowledge of how to ensure the best possible deal.
Every buyout is different. The business’s sector, financial record and prospects, and propensity to accommodate debt all have an impact on the way a deal should be structured and negotiated. The transaction process is lengthy and complex, and with a business to run it is essential that the management team is well advised.
As your advisers, we provide experience and support through all the stages of the deal. We bring long-standing relationships and knowledge of a wide audience of debt and equity funders. We make sure that you are paying an appropriate price and are using the right financial and tax efficient structure, and we co-ordinate and drive the many parties involved to maximise the chances of a successful conclusion.
INDEPENDENT MANAGEMENT ADVICE
When a management team are within a business that is changing ownership it can be important for them to receive independent advice (i.e. separate from sell side advice). This typically applies when the business is private equity backed and being sold to another private equity backer (a secondary buy-out).
- There is a risk of conflict of interest where management are both sellers and will become buyers.
- It is important that management have an adviser they can trust to give them independent and unbiased advice.
- Processes can be complicated; management’s adviser makes sure they focus on the details that matter (and not those that don’t).
- An independent adviser gives buyers confidence that management are fully involved in the process.
We have a lot of experience of advising management teams. We know how to properly advise teams and get them the best deal. We:
- Get stuck into the detail on management’s behalf.
- Prepare detailed financial models to enable testing and comparison of competing terms.
- Provide senior level experienced advice.
- Negotiate and optimise deal terms on behalf of management.
In summary we believe that a properly advised management team makes for a better deal for management and smoother and more certain deal process all round.