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Redactie
Financieel Management

An MBO is likely to include:

- Ordinary shares, subscribed for by the management and investors.

- Preference shares or loan stock (these give the entitlement to fixed dividends but generally have very limited voting rights), subscribed for by the investors.

- Senior or bank debt, usually provided by specialised acquisition finance units of (investment) banks.

- Revolving credit or working capital facility, supplied by banks.


Other sources of finance are:

- Superdividends paid out by the company to either Newco or the vendor to satisfy part of the acquisition price. In order to protect the position of creditors and other stakeholders of the company, the amount of such ‘financial assistance’ is often restricted by law to the amount of the freely distributable reserves of the company.

- Vendor finance, either in the form of debt or equity.

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