Cole Associates' team has many years of experience in advising
a wide variety of clients, across many different sectors, in the
UK and overseas. Our services include:
Plans and Financial Projections
Strategic Business Advice
Interim Finance Director
A management buy-out is an exciting opportunity
for an entrepreneurial management team to take control of its own
destiny, to take their business forward, and to secure a very positive
financial outcome. As with any unfamiliar business process, proper
solid advice for the buy-out team is crucial throughout this complex
and emotional process.
The opportunity for an MBO normally arises in two
situations: Either a family-owned business facing a generation change
with no family succession, or a group of companies looking to sell
a division or subsidiary, often because it is not core to group
The essence of the 'financial engineering' behind
a successful MBO is to borrow almost all the necessary funds for
the acquisition from banks and venture capitalists, then to use
the company's future profits and cash flows (which should be growing)
to repay the debt, thereby enabling the MBO team ultimately to sell
the business debt free on a multiple of the higher level of profits.
As venture capitalists take more risk than banks, they look for
a share of the ownership (ordinary shares), which dilutes the MBO
Cole Associates' role is to guide the MBO team
through all aspects of the process, recognising their dual role
as managers/employees of the vendor up to completion, and, at the
same time, prospective purchasers of the business. We aim to establish
and maintain a smooth relationship between the vendor and the MBO
team, by taking the lead, on behalf of the team, in managing the
entire transaction. Given the large number of people involved in
an MBO, our focus on project management includes coordinating the
critical path of the transaction, to facilitate a timely completion.
Specifically, Cole Associates' role comprises:
Valuation and feasibility review:
To determine upfront whether the vendor's price expectations
are sensible and if there is a realistic prospect for funding
MBO team in the preparation of their Business Plan and financial
projections, setting out their strategy for the business, and
determining the full funding requirement.
Advice on the
most appropriate funding structure (i.e. the mix of debt, venture
capital, finance leases, grants etc).
the funding opportunity to a selection of appropriate funders.
We have a comprehensive knowledge of the finance-raising marketplace.
MBO team in presenting their proposals to the funders.
with the funders, to obtain the funds on the most advantageous
terms possible for the MBO team.
the preferred funders throughout the remaining stages of the investment/lending
process, including due diligence and legal agreements, through
to credit approval.
Negotiating with the vendor:
pricing and tactics.
on behalf of the MBO team to acquire the business on the best
the lawyers to agree the legal documentation.
Project managing the transaction:
Coordinating the activities of all the parties and closely managing
the critical path, to facilitate a prompt completion.
At every stage of the buy-out, Cole Associates'
advice is directed solely at the MBO team, never at the vendor or
If you are considering a buy-out we would be happy to run through
our unique 7-stage financial feasibility review model, to provide
you with an initial indication of the prospects for a successfully-funded