Buying a business
Buying a business can be a complex and time-consuming process, often involving a number of parties. If you are considering purchasing a business, you are likely to make this purchase via one of the following transactions (please click on the transaction type for a definition):
MBO (Management Buy-Out) | MBI (Management Buy-In) | P2P (Public to Private)
So which type of transaction should you choose?
We, as advisors, will review your current situation in conjunction with that of the business to be acquired, in order to evaluate the relevant means for completion of your purchase. the answers you have to the following questions will impact upon the type of transaction you choose:
If considering an MBO or MBI:
- Are you part of a team willing to acquire a business you are managing? (MBO)
- Are you part of a team wishing to acquire a specific existing business, or simply to acquire any business which meets a set criterion? (MBI)
- Is the vendor willing to sell?
- Do you believe that the business has a great potential to grow?
- Are you looking for equity or debt finance?
If considering P2P:
- Are you willing to acquire a specific existing quoted business?
- Are you prepared to provide existing shareholders with attractive premiums?
- Are you willing to withdraw the business from public listing?
- Do you know the business well?
- Are you looking for equity or debt finance?
If you feel that your business circumstances match up to any of the criteria above, give us a call and we will assist you through the entire transaction process and advise you on any related issues.
How can we help?
We have vast experience in advising management teams and investors in buying businesses. We can provide you with all of the following:
- advice on the proposed transaction, its structure, and feasibility;
- a time-schedule and plan of the transaction;
- advice on the appropriate capital structure;
- a business model;
- a proposal to approach investors or debt providers (if relevant);
- advice on the price of the business;
- an assessment of the funds required and the use of funds;
- assistance with and preparation of the business plan and financial forecast for the acquired business;
- a list of potential investors and debt providers (if relevant);
- an assessment of the offers of finance;
- negotiation of terms;
- additional services â tax advisory, arrangement of contact with law firms.
Supporting you from start to finish
We will assist your management team on the transaction and ensure the smooth flow of the process. We will begin by assessing the feasibility of the transaction and advise you accordingly as to the capital structure. Often it is required that your management team provide at least some level of equity from their own funds.
We will also undertake a financial modelling exercise to ensure you pay a reasonable and accurate price for the business. This price will be estimated using valuation techniques, which reflect the business stage, industry, market position, etc.
In MBO situations, we will assist you in contacting feasible private equity houses and debt providers, ensuring that the management team are not distracted from their commitments to the business during the MBO process.
Specifically in MBI transactions, we will make sure that all relevant information about the business is disclosed and that the price of the business is reasonable.
In addition, we will provide tactical guidance regarding the negotiation of terms and conditions of the purchase, while drawing your attention to the potential risks. We will make sure that the management team are provided with all relevant information about the business. During the process, we will help you resolve any conflicts of interest.
MBO
An MBO is a transaction where by the existing management team responsible for running the business, acquires the business. Private equity investors who provide equity finance usually back the management team. Typically additional debt finance is arranged. The relationships between the management team and the vendor, and between the management team and the investors are crucial to the success of the transaction.Â
MBI
An MBI is a transaction in which a management team, external to a business, takes control of that business. The key considerations are: knowledge between the business; the relationship of the team and the vendor; the new ownersâ plans with the business and its continuity.Â
P2P
P2P is a form of buying a quoted company and taking it into private hands: private investors make an offer to shareholders to acquire the company. Being in private hands, the company can access both equity and debt finance, and there are no costs on maintaining a public listing.
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