Attendees at a recent seminar heard that 2015 has been a ‘bumper’ year for MBOs, and that this trend is set to continue thanks to a growing appetite from funders for financing deals, with both debt and equity providers keen to deploy capital for sensibly structured deals.
The free breakfast event – ‘MBOs Demystified’ – recently held at Hogarths Hotel, Dorridge, by Odyssey Corporate Finance, The Wilkes Partnership and Jerroms Accountants, explained the process, benefits, risks and planning issues related to management buy-outs,
The key message for anyone considering an MBO was to ‘plan ahead and be prepared’ – with attendees hearing real-life insight from Richard Grethe, who led the MBO of Focus Pharmaceuticals in 2007 when it had a turnover of £12m. He then sold the company in 2014 to a trade buyer for £70m.
Rick Smyth, corporate partner at The Wilkes Partnership and speaker at the event, comments:
“The event was fully booked, demonstrating the interest in and opportunities for MBOs in the current market. MBOs are once again a viable, even compelling, exit route for shareholders compared to trade sales and can provide once in a lifetime opportunities for ambitious management teams.
“The insight from Richard was extremely valuable, particularly in terms of how important it is to ensure that a business’s affairs are well documented and well organised to present to potential funders or buyers at all times. He also spoke about the importance of regularly reviewing alignment of interests and aspirations of individuals in the management team to ensure that everyone is on the same agenda.
“Richard also noted the importance of choosing an equity partner whom you get on with and of using professional advisors who are private equity/MBO specialists.”
Tom McCarthy, director at Odyssey Corporate Finance, added:
“As with many transactions, the key to a successful MBO is to plan early and spend time preparing the business and management team for the deal. The event outlined the different ways of funding and structuring a deal, highlighted why planning is key to ensuring all parties are comfortable with the approach taken.”
Katherine Hunt, head of direct tax at business advisers and accountants Jerroms, added:
“When looking at MBOs, there are long term planning opportunities and tax implications for both the buyer and the seller to consider. The event outlined how important it is to plan ahead to ensure that the deal is structured properly so that taxation is minimised for both parties. As with any transaction, timing is key and professional advice should always be sought.”
Feedback from delegates was very positive, with one describing it as ‘most insightful’ and ‘a must’ for business owners. In response, a further event is now planned for February 2016.
For more information on how the team at the Wilkes Partnership can help your business, please contact Rick Smyth on 0121 233 4333.