Selling your business to a management team, known as a Management Buyout (MBO), is a great way to exit your business. However, a poorly planned MBO can have consequences on business continuity, erode value and in the worst case cause the business to fail entirely. When it’s time to sell, our corporate finance advisors will make your exit happen by selling your business to the management team.Book a meeting
Before you make any declaration to your management team that you may sell your business to them, we will take you through the available options to ensure that an MBO is right for you and for them. We will advise on the benefits and pitfalls of selling to your management team versus an outside buyer.
We will provide balanced and practical advice on the value of your business and the most appropriate deal structure to make the sale to the management team happen. Failure to address valuation in the initial phases of an MBO is the most common cause of deal failure.
We will advise and support you on making the offer to the management team. We will work in partnership with you and the management team to structure and document a deal that works for both parties.
We will support and help you navigate through the complexity and hurdles to complete the transaction in a timely and efficient manner.
We have the expertise and capability to help sell your business no matter what industry you operate within.
We have the capability to help market and sell your business to interested buyers overseas.
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.
A sale to a management team can take on average 6 months. The process is normally a little shorter than a trade sale. However, a poorly managed process can take years if parties do not prioritise its completion. The most time-consuming part of the MBO process is the raising of finance, whether it has debt or equity. A third-party finance provider will need to be identified through a marketing process and this party will need to undertake its due diligence before extending funds. This part of the process is as rigorous as any trade sale.
It is very rare that a management team will have the funds to purchase the business in their own name. They will need to use the business to raise finance, very much like a mortgage on a house, or they may partner with a third-party provider known as Private Equity. In all circumstances, money will be raised or secured on the business in order to meet the purchase price. Where a seller maintains a proportion of the equity this is often challenging for the seller to accept, but it is an inherent feature of an MBO.
A management buyout (MBO) can provide continuity with your business. It can reward those around you that have contributed to the growth of your business with future ownership. It can provide an exit for you if your business is unlikely to be of interest to trade acquirer.
By its very nature an MBO places you as seller and the management team as buyer in potential conflict. This needs to be managed very carefully as each party has significant vested interests in the transaction. The option of simply walking away is not there for either party. The dynamic of an employee, or number of employees, negotiating as equal with their employer is commonly challenging. Carefully setting out expectations early in the MBO process is essential to navigate these pitfalls.
Possibly, it is not always the case, but many management teams will often seek a 'softer' price than the market valuation at the point of sale. However, this is for the seller to manage when introducing the management team to the concept. An MBO represents a fantastic opportunity for a management team without softening the valuation. You should expect to get your money much more slowly or to retain some equity in the business as a management team will not be able to raise sufficient debt to purchase the business at market value at completion. This can differ if Private Equity is supporting the deal where cash on completion is possible.
We have completed numerous sales to management teams using debt, Private Equity or fully financed by the seller. Our experience will help you navigate the pitfalls of an MBO and ensure that a robust and deliverable deal structure is agreed with your team that can be financed prudently. We will support your transaction with our project management skills allowing you and your management team to focus on the business. Our experience will ensure that your deal happens.
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.
We work with businesses looking to sell that have a value of more than £5m. We may agree to work with slightly smaller businesses in circumstances where a buyer has already been approached and the mandate falls short of a full marketing process. There is no theoretical maximum value of the businesses that we work with. In recent times sales values have approached £100m and our median deal value is between £20m and £30m.
No, we are not brokers. We are professional advisors. Whilst our role often involves the introduction of parties to a deal, our value is much greater than a simple introduction service. We support you in the development and articulation of your business case, the negotiation of terms and the management of completion - all of which materially improve the end result, adding significant value to your transaction.
Our fees are predominantly "Success Fees", meaning that we get paid on completion of the deal. We take great care to make sure our fees are aligned with your goals. We take pride in our fees always being a proportion of the value we add.
We have specific sector knowledge derived from many years of collective deal making experience. However, we pride ourselves on the diversity of sectors we work with which challenges us to think creatively. This creative and challenging approach brings huge value to our clients when helping them to build robust business cases.
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