Kingsworth Associates

Management buyouts ("MBOs") and management buy-ins ("MBIs") as well as their variants including, increasingly, employee buyouts ("EBOs") are of course both acquisitions and disposals. Therefore, it is worthwhile taking note of some of the principal issues which are peculiarly pertinent to this type of transaction.

These issues include:

  • analysing and weighing the respective merits of pursuing an MBO as against, say, a trade sale, and the merits of pursuing a trade sale contemporaneously with the MBO process;
  • irrespective of whether the advice is being given to the vendors or to the management team, a candid appraisal as to whether the providers of debt and equity finance are likely to regard the management team as backable;
  • what financial backers would typically expect of a management team, including individual credentials, a co-ordinated strategy and personal financial commitment;
  • an overview of the likely appetite from the debt and equity providers for MBOs in general and individual sectors in particular at the time when the MBO is envisaged;
  • guidance on the form and content of the business plan which will be the management team’s most important marketing document for fund-raising; and
  • an objective assessment of the possible exit opportunities for the management team and their financial backers and a likely timeframe for an exit.