Case study: Management Buy Out (Private Equity & Debt)

Retained by the management team to lead the prospective acquisition of a company with turnover of circa £5 million providing business services to primarily public-sector clients.  The company was to be acquired from two charitable trusts.

Conducted business appraisal and made approaches to banks and private equity houses to determine funding viability.  Then led negotiations with vendors and prospective backers leading to outline agreement with the vendors to acquire the business for some £4.5 million.  This was to be financed by a debt/equity package and a limited element of vendor finance.

Thereafter, instructed and supervised solicitors leading to the successful completion of the transaction.

Work included overseeing the conduct of the transaction including: -

• Preparing a spreadsheet-based financing model to assist in the financial engineering and undertaking sensitivity analysis;

• Advising on valuation;

• Bringing in and co-ordinating the role of a tax consultant to ensure the tax efficiency of the transaction;

• Preparing and negotiating heads of agreement;

• Making approaches to prospective backers and assisting evaluate and negotiate offers;

• Advising in the formulation of the strategic plan and funding proposal;

• Dealing with due diligence issues as they arose;

• Advising the management team on the implications of the transaction;

• Assisting formulate and implement an employee share option scheme.