enabling a management buy-in

A management buy-in (MBI) is a complex transaction where an outside management team purchases a controlling stake in a business they wish to buy, normally using third party finance. MBIs are notoriously challenging. A poorly managed MBI may not happen at all and can have a long-term negative impact on the business if structured incorrectly. Our experts support management teams through the complexity to make the MBI happen.

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How we can help

ASSESSING YOUR LEADERSHIP CAPABILITY

We will assess the leadership capability of the management team wishing to acquire the business. We will advise if the team has the skills and capability to complete the transaction. Funders and vendors require a high level of expertise from incoming management.

ASSESS YOUR FUNDING CAPACITY

We will advise on the appropriate funding structures based on management equity contributions and the nature of the target business. We will determine how much debt or equity funding the management team could raise to make the MBI happen.

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IDENTIFYING A SUITABLE TARGET

We will use our research capability to identify suitable acquisition targets both domestic and international. We will advise on the most suitable targets to approach based on your search criteria and our knowledge of the market.

WE’LL HELP YOU MAKE THE FIRST APPROACH

To express your interest in the target business, we will advise on the most effective technique to make the first approach. We can leverage our experience and credentials to ensure your approach is taken seriously.

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WE WILL QUALIFY YOUR TARGET

We will benchmark the target business against the agreed capability and financial requirements. We will advise if the opportunity is worth exploring further and making an offer.

VALUATION AND DEAL NEGOTIATION

We will leverage our market knowledge to perform a commercial valuation of the target business. We will negotiate and structure a deal ready for your legal team to take to contract.

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WE WILL MANAGE THE TRANSACTION

We will manage the deal completion process ensuring all parties report and deliver on time to make the acquisition happen. No doubt every process will throw up unexpected challenges and we will be on hand to help you through these.

ADDITIONAL BENEFITS

SECTOR AGNOSTIC

We have the expertise and capability to help you buy any type of business in any industry.

INTERNATIONAL REACH

We have the capability to help you buy a business that is internationally based.

CIRCUIT BREAKER

We act as a ‘circuit breaker’ to remove the emotion and difficult conversations from your hands.

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Why Shaw & Co

WE MAKE DEALS HAPPEN

Our highly talented people are creative, innovative and thrive when faced with a deal-making challenge. It's no surprise that we make deals happen and turn your ambition into a greater outcome.

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Fees & charges

COMPLETELY TRANSPARENT & ALIGNed With your GOALs

Our objective is to ensure that our fee more than pays for itself from the value we create for you and your business.

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FAQS

How can a corporate finance advisor help me?

Corporate finance transactions are not an everyday activity and it is unlikely you will have the up-to-date knowledge you need in your team to navigate a deal. We provide expert advice when you need it to get the right solution for you.

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How long does a management buy-in (MBI) process take to complete?

The most uncertain period is identifying a target and negotiating initial terms, quite often your target is not ready to sell and it can take months or years until they are. But once negotiations start and sufficient information is in hand to start the process of raising finance, a period of 6 to 9 months is common depending on how well prepared for the target is for the process.

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How much funding can you help me raise for a management buy-in (MBI)?

The amount of funding that can be raised is complex and depends on a number of factors. This includes the amount of equity the MBI team are committing. It is not unusual for this to be in the region of 20% of the purchase price or amount borrowed. Other factors include the level of sustainable profits in the target business to service any debt or the willingness of an MBI team and a Private Equity investor to partner on the acquisition.

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If the management buy-in (MBI) fails at the last minute, do I still pay Shaw & Co’s fees?

All fees for acquisition work are charged on a per hour basis and are not contingent on the deal happening. That means that yes, you will be required to pay our MBI advisory fees if the deal does not happen. This structure ensures we remain aligned with your interests. The best advice that we might be able to give you is not to proceed if new information is discovered at the very last minute. Success Fees relating to raising finance for an MBI are contingent on completion.

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What are the advantages and disadvantages of raising debt to finance a management buy-in (MBI)?

Debt is often preferred by MBI teams as the terms of a debt facility are simpler than an equity investment. When the debt is paid off the MBI team own the business without having to contemplate a further transaction. However, the amount of debt that can be raised limited to a proportion of business value and therefore using debt alone will limit the price an MBI team can pay for a business as any gap will need to be filled by management equity or vendor deferral. Debt can also put cash flow pressures on a business and this needs to be carefully considered.

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What are the advantages and disadvantages of raising equity to finance a management buy-in (MBI)?

An equity partner can bring a more flexible funding package to your MBI, and a partner to help you develop and grow the business. However, this also adds a complex further dimension to your transaction and the business post deal that may not be welcome. Certain MBIs lend themselves to raising equity, particularly where the MBI team have a pre-existing relationship with the equity partner from a previous deal for example.

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What things can go wrong during a management buy-in (MBI)?

An MBI is complex with many moving parts. Issues range from the inability to agree pricing and structure, to due diligence challenges that may require renegotiation of price or warranties or restructuring of finance packages. MBIs also require the blending of many new characters that have not previously worked together. We can help you navigate these issues with the foresight our experience brings.

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Why should I use Shaw & Co to help me with a management buy-in (MBI) opportunity?

We have extensive experience with buy-side negotiation and finance for management led transactions. We understand the key drivers to making an MBI successful. We can bring together our expertise to make your MBI happen.

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We put you first

One of our six promises is to do the right thing and put your interests before ours. We work harder to achieve the best deal for you and your business.

"At every step of the journey, through the build up to our sale, and in the subsequent acquisition by Unilever, Shaw & Co worked with us to protect and champion Pukka’s values and mission. They have helped us find the right home in Unilever, and to create an exciting future for Pukka Herbs."

Tim Westwell, Co-founder & CEO at Pukka Herbs

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