A management buyout (MBO) is a complex transaction where a company’s management team purchases the assets and operations of a business they currently manage. A poorly managed MBO can have a long-term negative impact on the business. Our experts support management teams through the complexity to make the MBO happen.Book a meeting
We will assess the leadership capability of the management team wishing to undertake the buyout. We will advise if the team has the skills and capability to complete the transaction. Funders require a high level of expertise from any management team that they are going to back.
We will assess the financial resources of the management team to determine if a management buy-out is feasible. We will determine how much debt or equity funding your management team could raise to make the MBO happen.
We will value the business to help the buy-side and sell-side navigate the thorny issue of price. We will leverage our market knowledge to perform a commercial valuation of the target business. Once valuation is established deal structure can be considered.
All MBOs require a funding package to support them. We will determine how much debt or equity funding you can raise to facilitate the MBO. We can manage the funding process on your behalf.
We will support the buy-side and the sell-side through the complexity to complete the management buyout in an timely and efficient manner.
We have the expertise and capability to help you buy any type of business in any industry.
We have the capability to help you buy a business that is internationally based.
We act as a ‘circuit breaker’ to remove the emotion and difficult conversations from your hands.
Why Shaw & Co
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.
Fees & charges
Our objective is to ensure that our fee more than pays for itself from the value we create for you and your business.
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.
Depending on the willingness of the parties to transact and the complexity of the funding structure, and MBO can be completed in a relatively short time scale of 4 to 6 months. However, this depends on the bandwidth that management are granted alongside their day jobs to complete the transaction and the readiness of the business for external due diligence as will be required by a funding partner.
The amount of funding that can be raised is complex and depends on a number of factors. This includes the amount of equity the MBO 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 MBO team and a Private Equity investor to partner on the acquisition.
All fees for MBO 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 MBO advisory fees if the deal does not happen. It is common for the target business to provide support to an MBO team for these fees. 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 MBO are contingent on completion.
Debt is often preferred buy MBO teams as the terms of a debt facility are simpler than an equity investment. When the debt is paid off the MBO 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 MBO 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.
An equity partner can bring a more flexible funding package to your MBO, 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 MBOs lend themselves to raising equity, particularly where the ambition of the MBO team is significant and the teams background is more corporate or indeed they have worked with private equity previously.
An MBO 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. MBOs also require a careful balancing of characters where employees become owners and the changing dynamic can create issues. We can help you navigate these issues with the foresight our experience brings.
We have extensive experience with MBO negotiation and finance for management led transactions. We understand the key drivers to making an MBO successful. We can bring together our expertise to make your MBO happen.
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.
Subscribe to receive news updates, Connected Magazine, details of forthcoming events, opinion on issues that matter to you and more.