THE Howes Percival corporate team in Northampton has recently helped two management teams acquire shares in the companies they work for – Fleet Assist Limited, acquired by US fund Eli and Acorne Limited acquired by London based Inflexion.
The two situations were very similar: the owners of the companies wished to sell and retire. A private equity investment fund was chosen as the buyer, but they will want the key managers to stay on and to be incentivised to do so by acquiring a minority stake in the company. The management team needs independent legal advice on the terms of their investment, which is where we come in and can add value.
Very often, the timescales for such a transaction are very tight and the management equity documents are distributed very late on in the process. This means that the lawyers acting for the management team have to have the skills, expertise, experience and resources to advise the management team quickly and robustly. Private equity investors are skilled and tough negotiators, but will usually admit and concede well argued, logical and commercially important points. A willingness to compromise and to trade points is essential.
A successful negotiation should result in the management team being given a once in a lifetime chance to become partial owners of the business which, in many cases, management have spent years working for. The exciting part is that a private equity investor will need to see the business grow and become more profitable and they should have the money to make further investments into the business in order to achieve that growth. They will then look to exit via a sale in a three to five-year timescale, with the management team selling at the same time at, hopefully, a much enhanced price. Quite often the sale will be to another private equity investment firm, and management will be asked to re-invest some of their proceeds into the business again.
If you are a management team who thinks you may have the opportunity to participate in a private equity backed acquisition, get in touch to arrange a no obligation meeting to discuss how Howes Percival can help you. Contact
