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Financieel Management

In most buyouts the costs of professional advisers will be borne by Newco upon legal completion of the deal, so management will not be ‘out of pocket’ as a result.

The costs will include the fees charged by the management team’s advisers (the financial adviser and lawyers) and the investor’s advisers (lawyers and due diligence advisers).

The banks and the investor will usually also charge arrangement fees. Total costs will typically amount to between 3 and 5% of the money being raised.

The cost of fees should be agreed in writing at the earliest possible opportunity and the management team must ensure that they are not personally liable for unexpected and sizeable fees should the deal not go ahead.

The financial advisers to the management team will often be working almost wholly on a contingent basis, their fees dependent on legal completion.

It is not unusual for the investor to bear the costs of the management team’s lawyers and tax advisers should the deal abort.

The risk of the due diligence and legal documentation costs are borne by the investor.

Sometimes the vendor is willing to underwrite some element of the professional fees incurred by the management team and relating to the due diligence.

This underwriting is mostly restricted to the situation that the vendor withdraws from the transaction.

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