Management Buy Out (MBO)

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Management Buy Out (MBO)

At Sterling Capital Reserve, we provide proactive services to the proposed Management Buy out (MBO) team throughout the transaction.

It is easier to continue an existing company than start a new business; a Management Buy-Out could be the ideal solution for both vendor and the remaining management team.

Typically, an MBO team will be doing their first deal, so getting support through the process is invaluable.

A funder will support you financially for MBO for several years, and once the finance is repaid, you will have gained an equity value in your own business for a relatively small investment.

At Sterling Capital Reserve, we play a pivotal role in respect of Corporate Finance advice and sourcing funding for your proposed transaction. We deal with the vendor, the funders, the solicitors and other professionals on behalf of the MBO team, from inception through to legal completion.

Don’t just assume an MBO isn’t possible just because your bank has no appetite.

We have access to plenty of niche lenders who do.

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    What is an MBO?

    A Management Buy-Out (MBO) is a financial transaction in which a company’s existing management team acquires controlling ownership from its current owners.
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    What is the process of an MBO?

    The MBO process generally involves several stages: planning, negotiations, financing, due diligence, legal documentation, and post-transaction management.
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    What is the role of an MBO adviser?

    Early appointment of a corporate finance adviser is essential. Sterling’s role fully involves project managing all aspects of the transaction from the first meetings to completion.
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    Management Team vs Trade Sale?

    Several benefits can be associated with a management team buyout (MBO) compared to a trade sale. See our list of some potential advantages of an MBO.
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    How do we finance an MBO?

    There are several ways to finance a management buy-out (MBO), depending on the circumstances of the transaction and the available financial resources.
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    What are the timescales?

    An MBO will take anywhere between 3 and 6 months, but there are many reasons why it may take longer than this, often beyond the control of either vendor or the MBO team.
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    MBO team cash contributions

    Most MBO candidates will need to contribute to the deal significantly. The amount will often be a fraction of the overall funding required; nevertheless, all lenders expect them to contribute to the deal.

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    What should an MBO Team consist of?

    For an MBO to be successful, then the quality of the management team is essential, and lenders will need to be convinced by the teams experience, enthusiasm and a commitment to the buy-out.
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    What are the costs involved?

    The majority of fees will be contingent upon the successful completion of a MBO, thereby protecting the management team from professional fees should the deal not go ahead for any reason.
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