Video 20 – Are My Management Team Potential Buyers Of My Business?

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Mike Whittle:

So they have the money. Oh, invariably not. As Rob mentioned earlier, quite often within a business, one of the sort of obvious targets to buy the business are the management team that are emerging underneath the shareholders, they have the skills they understand the proposition in the business very well. Particularly they don’t have the money and we do quite often get involved in transactions where the shareholders will be trying to support their management team in the purchase of their business.

Mike Whittle:

I think my only advice would be from recent transactions that’s unlikely to deliver you best value, because it will fail the, has there been market competitive tension tested, and typically the management team won’t want to pay a premium for the business and sometimes owners don’t want the management team pay a premium for the business. But often they won’t have any mechanism to secure the funds to support the transaction.

Mike Whittle:

So either way they would need someone like us assisting them and looking for ways that they can raise the funds for the transaction, anyway.

Rob Goddard:

You got one on the go at the moment.

Steve Barry:

Yeah. And I think one of the lessons that would teach us would be, if you have a really capable management team that are the right people to buy out, either in full or partially the founding shareholders of the business, but they’re struggling in terms of funding. Don’t assume that debt is the only vehicle they can use to fund the transaction because there are private equity firms that will comfortably work with management teams and or management buy in.

Steve Barry:

So sector experienced individuals joining those businesses with private equity backing to them so that all can become bested in the business to deliver value both to the existing founding shareholders and to the future forward-looking team and some PE houses love that because that helps to de risk the transaction because you’re keeping them for management.

Rob Goddard:

So management buy in, MBI, management buyout MBO. Combine the two, bimbo.

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Alternatively, If you would like to discuss a potential business sale with one of our Client Directors, please either call Amanda on 0118 959 8224, email agale@evolutioncbs.co.uk or Make An Online Enquiry.

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