Management buy-outs come of age
Article Abstract:
A management buyout can be used to divest a company of a division, to acquire a public company, to take a company private, or to defend against a hostile takeover. Perhaps the diversity of their purposes helps to explain their increasing popularity in Great Britain. The normal features of management buyout transactions, a brief history of management buyouts in Britain, and seven trends related to this type of consolidation activity are discussed. The seven trends are: (1) the increasing size of management buyout transactions, (2) the increasing attraction of management buyouts to institutional investors, (3) the use of 'gearing' when financing a management buyout, (4) the higher acquisition costs for firms, (5) the complicated structures of management buyout transactions, (6) the larger number of factors motivating such buyouts, and (7) the increasingly international aspects of such buyouts.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1986
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How to structure a management buy-out
Article Abstract:
A management buy-out effort consists of three parties, a management team, institutional investors, and banks. To be successful, each party should be comfortable with the others and have clearly defined objectives. Management should look for partners who can supply the funds for the initial purchase as well as for future growth. Investors should not only ensure that the management team and the company are sound, but also that the company does not have high overhead costs or poor cash flow. A number of financing tools, such as ordinary shares, bank loans, and mezzanine financing are available; the method used will depend largely on the financial profile of the company being purchased. After the buy-out is consummated, the management team and the investors should remain in close contact; this can be accomplished by appointing a non-executive to the board of directors.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1986
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Buy-outs are back
Article Abstract:
Management buyouts (MBOs) are expected to figure prominently in British financial transactions for the mid-1990s. This forecast is based on several favorable economic indicators for the region, such as a fall of personal savings to personal income ratio and the rise in ratio of companies with pre-budget trading to firms marked by budget-lagging trading. Among the potential sources of MBOs are receiverships, British or foreign patents, privatizations, family-owned businesses and buy-outs of public companies. MBOs are facilitated through funding raised from equity, bank debt, mezzanine financing and vendor loan notes. A well-established investment record in MBOs coupled with the utilization of a distinct niche market are critical to the sourcing of MBO funds.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1991
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