Helping you navigate your MBO

As a manager, becoming the owner of the business you have worked for through a management buy-out (MBO) can be highly rewarding. In addition, you have the bonus of an in-depth knowledge of the business and your people. We find that the new owner(s) benefits from staff loyalty and continuity of operations during and after the process.

MBOs can work as a win-win, offering an effective way to facilitate an existing owner’s exit, either to explore new business opportunities or step back and retire.

While MBOs usually require a less excessive due diligence process, with the purchaser’s knowledge of the business, we understand how stressful it can be to embark on this process while continuing to manage the day-to-day of the business.

In addition, although a highly effective mechanism for achieving a change of control, MBOs are notoriously difficult to negotiate. Through handling MBO transactions for many years, RSM have a deep understanding in managing these complex processes. We’ll help you, the purchaser, navigate the complexities to reach a successful conclusion.

MBOs are complicated as management teams find themselves on the same side as the vendor (essentially working for the existing shareholders), while at the same time in the role of a potential buyer. Equally they are working with finance providers to affect a purchase, while negotiating against those same providers to secure their own terms. We understand how to manage these conflicts and our role is to handle these negotiations in such a way that the deal stays on track.

RSM has a detailed understanding of the leading finance providers to the middle market. Today there is a wide range of funding options available; we understand funder motivations, return requirements, pricing, capabilities and most crucially which commercial areas to focus on during MBO negotiations.

We know the private equity market; the positioning, the approach and the differentiating features of individual managers. The private equity market funds a high proportion of successful management buy-outs in Ireland. Maintaining a detailed and current understanding of the industry’s pricing, structure, terms, personnel and dynamics is core to the advice we provide.

To support effective negotiations we will frequently:

advise on the financial model and business plan;
analyse relevant transaction structures;
manage the due diligence process; and
provide commercial input to the legal agreements.

Sourcing and negotiating the most appropriate means of financing a MBO can be time consuming and risky. Working in collaboration with you, our knowledge of the financing market serves to reduce execution risk and strike the optimum deal through an efficient and structured process.

Our objectivity enables us to negotiate the best deal, allowing you to maintain strong relationships with both the vendors and providers of finance as you head into a new era of ownership.