We advise management teams on completing management buy-outs (MBOs) of privately owned companies, of private equity backed companies (a secondary management buy-out) and of subsidiaries of larger corporate groups and plcs.
We are experienced in all these types of transactions. We have strong relationships across the equity and debt markets, covering main stream mid-market funds, multi-billion pound funds, sovereign wealth funds, family offices and alternative non-bank debt funds. This gives us deep insight in to fund strategies and life cycles, which are a key driver of investment appetite, and ensures we know 'the Art of the Possible' in terms of capital structure and equity investment terms.
In addition, a key part of our advice is to assist a management team in maximising their influence in a process.
Key questions to address in this respect are:
- Is there an opportunity to pre-empt a sale process being instigated by the owners? If so, what are the most appropriate tactics to get the owners agreement to an MBO? Should management approach the owners or help a private equity firm make an approach?
- If the owners are launching a sales process, are the management team being given the opportunity to approach private equity and make their own offer for the business?
- If not, can they insist on specified private equity firms being included in the process?
- Will the selling documentation presented to potential buyers/investors represent the management team’s view of the business and its future strategy and growth plan?
- Will the management team have the opportunity to meet preferred private equity firms outside of the formal presentations to develop a relationship?
- Will the management team have a say in the decision process of which offers are taken forward and, ultimately which one is accepted?
The more the answers to the above are 'Yes', the more influence a management team will have on the process. In our view this is positive for all parties in a private equity process, as it is confidence and belief in management that will increase the appetite of a private equity firm and positively manage their assessment of risk. Therefore, properly approached majority shareholders (and their advisers) should be open to this.