Corporate Finance Case Study
The following post is from Stuart Sheldrick, Director at Chelmsford:
“Corporate finance case study – Management Buyout
Do you know what our clients’ future plans are? If not, those of you who are client facing should ensure as part of our client contact (and where appropriate), we should be discussing what their plans are for the future.
With this information we can help them on their journey with strategic planning, and potentially assist with the ultimate sale of their business.
Case study – Anglia Fixing Ltd
In raising the subject of exiting/succession planning with the client over 5 years ago, the client highlighted their plans to exit the business within 5 years as part of their retirement. In knowing this we embarked on a plan to ensure the business was ready for a sale, including ensuring there was no over reliance on the two shareholders, undertaking a pre due diligence exercise and looking at ways to increase the value of the company.
When ready we marketed the business for sale, looking for a trade buyer on the basis we felt this would achieve the best outcome for the client, and on the basis the nature and size of the business would not attract private equity interest. Sadly, due to market conditions we were not able to find a suitable buyer for the business, but the work we performed was not wasted as the business was in good shape to sell.
Once the pandemic had past, we revisited the exit of the shareholders and at this time with the development of the management team, we felt a management buyout (MBO) was the best option, having considered the use of an Employee ownership Trust (EOT).
Having decided the approach, the corporate finance team worked with the client and management team to value the business, structure the transaction and aid the client to a successful completion to ensure the shareholders were able to exit, and also ensure the company was able continue.
For the firm this created significant advisory fees where we continue to act for the company under the new management, dealing with compliance matters. The exiting shareholders are extremely happy having been able to retire with the aid of the financial services team providing financial planning”.