Most fees in an MBO are paid by Newco (A new company owned by the management team to acquire the Trading Company) upon the successful completion of the deal.
The majority of fees will be contingent upon the successful completion of an MBO, thereby protecting the management team from professional fees should the deal not go ahead for any reason.
It is common for each party to pay their own fees, but sometimes a vendor may underwrite part or all of a management team’s costs should the deal not proceed.
Types of fees will include the following:
- Management team advisers
- Tax advisers
- Lender arrangement and legal fees
- Valuation fees
- External Due Diligence
Could you let me know what the costs are?
The deal’s costs will vary depending upon the size of the deal, complexities, the structure of funding and the extent of external due diligence requirements.
Don’t forget; in addition to the above fees, stamp duty is payable on the acquisition of shares at 0.5% of the consideration.
At Sterling, we undertake MBO transactions on a wholly contingent basis.
For an indication of our costs for your transaction, call us; we would be delighted to assist.