IF YOU ARE planning to sell your business, one option might be a management buyout. Preparation well in advance will help to ensure that the MBO team is right for the deal and that your business is presented in the best possible shape.
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“By getting your business MBO-ready as early as possible, it is more likely that any deal will succeed, completing quickly with no hiccups,” says Tom Bodkin pictured, a partner in the corporate and commercial team with Borneo Martell Turner Coulston.
He considers how to ensure your business is fully prepared for a management buyout.
The MBO team
All management teams are unique and it critical to consider that the MBO team have the ability to not only manage the business but also to unite as viable owners early on. It is important to analyse the management team in the same way that an external funder would.
Profitability
In priming your business for a MBO, you need to look at your business as a potential purchaser would view it. The MBO team will be assessing all the financials during the due diligence stage but if there are any cost savings that can be made to boost profitability in advance of a buy-out process, this will only enhance your position.
Business contracts
As part of your quest for increased profitability, you will want to review your business contracts to see if any require attention. Do you have a particular contract that is highly lucrative or any loss-making contracts that you need to terminate?
We can advise on any contractual issues arising from this review.
Company debts
It is commonplace for companies to carry debt but if yours is likely to be a concern to the MBO team or their funders, consider debt redemption as part of the deal or at least have a plan in mind as to how any debt will be dealt with in negotiations.
How Borneo Martell Tunrner Coulston Solicitors can help
Our solicitors will guide you throughout the whole MBO sale process, from helping you to shape your business into an attractive proposition and agreeing the deal in principle right through to due diligence, agreeing contracts and completing.
For an informal discussion, contact Tom Bodkin the corporate and commercial team on 01604 622101 or email .
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.