How to spot the opportunity for an MBO?

26-10-2007 09:44	How to spot the opportunity for an MBO?
De redactie Redactie Financieel Management	The opportunity for a management buyout may arise in a number of ways. - A division of a larger group is or may become a non-core activity. Management could prevent the company being put up for sale by initiating a management buyout. - A company may find itself in difficulties and need to sell all or part of the business. In such cases there are usually immediate cash needs. Management may be the only potential purchaser able to meet a short timescale. - Unwanted acquisitions. With large acquisitions it is often the case that the purchaser is not interested in all the businesses acquired. - Succession issues. In many established family companies often no obvious successor exists for the owner planning to retire. - Divergent shareholder aspirations. In situations with a variety of shareholders it is possible for the aspirations of different shareholders to diverge over time. Such circumstances can lead to indecisiveness about strategic direction and actions and may paralyse business development and growth. Management may suggest the possibility of replacing (buying out) some or all of the shareholders. - Secondary buy-outs. It is not uncommon for one ore more investors to be replaced by a new investor, essentially doing a second management buyout. - Listed companies may no longer see the rationale of their public status. For management a public buyout is an option to maximise shareholder value, create access to (private) equity, free the company of the constraints which public status imposes and regain strategic flexibility. - Receiverships. Where a group of companies has gone into receivership it may well be possible for management to purchase one or more profitable parts. Management is clearly positioned as the best buyer because of their inside information on past developments that lead to the receivership and their ability to select the viable businesses, as well as the flexibility and speed of a management buyout which is often needed in such a situation. « Terug naar Management Buy Out

26-10-2007 09:44

De redactie
Redactie
Financieel Management

The opportunity for a management buyout may arise in a number of ways.

- A division of a larger group is or may become a non-core activity. Management could prevent the company being put up for sale by initiating a management buyout.

- A company may find itself in difficulties and need to sell all or part of the business. In such cases there are usually immediate cash needs. Management may be the only potential purchaser able to meet a short timescale.

- Unwanted acquisitions. With large acquisitions it is often the case that the purchaser is not interested in all the businesses acquired.
- Succession issues. In many established family companies often no obvious successor exists for the owner planning to retire.

- Divergent shareholder aspirations. In situations with a variety of shareholders it is possible for the aspirations of different shareholders to diverge over time. Such circumstances can lead to indecisiveness about strategic direction and actions and may paralyse business development and growth. Management may suggest the possibility of replacing (buying out) some or all of the shareholders.

- Secondary buy-outs. It is not uncommon for one ore more investors to be replaced by a new investor, essentially doing a second management buyout.

- Listed companies may no longer see the rationale of their public status. For management a public buyout is an option to maximise shareholder value, create access to (private) equity, free the company of the constraints which public status imposes and regain strategic flexibility.

- Receiverships. Where a group of companies has gone into receivership it may well be possible for management to purchase one or more profitable parts. Management is clearly positioned as the best buyer because of their inside information on past developments that lead to the receivership and their ability to select the viable businesses, as well as the flexibility and speed of a management buyout which is often needed in such a situation.

« Terug naar Management Buy Out

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