What is a

Management
Buyout

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 What is a Management Buyout

A deal in which a business is

bought from its owners by a
Management Team, financed
by a Private Equity Firm

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 What is a Management Buyout
Opportunities
Corporate Restructuring
Controlling Shareholders or
Founders Sellout
Sale of an viable business by
a Receiver or Administrator

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 What is a Management Buyout
Parties to the deal may include:
The Seller
The SPV Company formed to
make the acquisition
The Private Equity or Third
Party Funder (Bank?)
Buyout Team Members
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 What is a Management Buyout
Remember that each of these
parties has their own;
Agenda
Priorities
Parochial Interests
Expecatations
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 What is a Management Buyout
Add in more complexities:
Financial Advisers
Due Diligence Advisers

(Lawyers and Accountants)
Tax Advisers
Legal Documentation
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 What is a Management Buyout
Funding
Debt
Equity
Working Capital Facilities

(Loans and Overdrafts)

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 What is a Management Buyout
Bank
Debt Funding 50%?
Security over Assets
Interest Payments
Principle Repayments
Lowest Risk
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 What is a Management Buyout
Equity
Private Equity 40-50%
Alongside Management
Shareholder Agreement
(Rights and Vetos)

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 What is a Management Buyout
Equity
Management Equity
Smallest Investment
Highest Capital Gain
Skin in the Game
“Sweet Equity”
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 What is a Management Buyout
An MBO provides Management
with the opportunity to make a
substantial capital gain for a
relatively modest investment
Financed by Banks, Private
Equity Firms and the
Company’s own cash flow

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 What is a Management Buyout
Summarise
Purchase of a company by its
management
Financed by Banks and Private
Equity Firms
Management modest investment
for high return

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 What is a
Management
Buyout

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