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An MBO occurs when the existing management of business acquires all or part of the shares from the existing shareholders. If external management acquire the shares the term MBI is used. These types of acquisition present management with a number of challenges and professional advice should be sought before any approach to the existing shareholders is made.
Why choose PKF
Our national corporate finance team have completed numerous MBO / MBI deals across a wide range of sectors. We have a wide range of funding contacts which we have developed through our MBO/MBI and other corporate finance experience. Our understanding of SME businesses and those issues that may be important to Vendor shareholders also assist the delivery of an MBO / MBI transaction.
What we offer
We offer a full support role to management teams which may include the following advice / services during the transaction:
- Initial advice: we provide support at the initial planning stage of your proposal including sensitive issues such as how to approach the Vendor and considerations with regard to directors' duties and confidential information
- Valuation / structural advice: we provide guidance on what you might be able to pay for a target and what values a trade buyer may be able to offer. We can provide alternative financial structures to look at ways of narrowing the gap between trade prices and what you can offer
- Tax planning: we can advise on tax-efficient structures for your investment in the target as well as tax issues that may affect the Vendor so that any offer is structured as attractively as possible. The initial tax planning is very important as it will affect your tax position when you exit the business
- Business planning:we can help you plan in more detail how the business will look following the transaction and how the new management team will function both for your own benefit and for funders who will need this information to assess your proposal
- Financial modelling: we can assist in the development of financial models to ascertain the funding requirement which will assist in fund raising
- The approach: once we have indicative financial support for your proposal, we can assist in the initial approach to give credibility to your bid and hence the best chance of success. We can support initial negotiations to ensure the Vendor is comfortable you can deliver your bid and that under the circumstances an MBO/MBI represents an attractive form of exit
- Heads of terms: we can document the agreed terms so that both sides are clear on the deal subject to fund raising and due diligence and can agree exclusivity arrangements which include a timeframe to complete the deal
- Closing the deal: management of the funder / your due diligence negotiation of the acquisition agreement / funder documentation and working with your lawyers and other advisers until the deal is completed;
- Post deal support: dealing with post deal issues such as completion accounts, calculation of deferred consideration as well as monitoring progress and providing continued support.
An MBO / MBI transaction represents a significant challenge for the acquiring management. As part of your team, PKF can provide the necessary guidance to give you the best chance of a successful outcome.
Recent transactions
To view our recent Management Buy-Outs (MBO) transactions please click here.
Further information
If you would like further information please speak to Malcolm Cook or click here to contact us with an outline of your requirements. | Malcolm Cook
Partner
MBO/MBI advisory
0121 212 2222
malcolm.cook@uk.pkf.com
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