Page 26 - PWM_OCTOBER 2021 EBook

TECHNOLOGY REPORT

Making a planned exit

usiness owners looking for an exit have a num- years in advance, bringing trusted staff into management as
ber of possible options including the traditional a form of succession planning. To her mind, the popularity
routes to market, which often involve working of MBOs comes from owners who “see a management buy-
with corporate finance advisers or approaching out as the conclusion of a long-term strategy to grow and
competitors or colleagues in the industry. But push the business forward whilst keeping it within the
B there may be no successor within the family, or hands of those that know it best.” And the example of
the owners may not wish to hand their business, built up Glossop Cartons illustrates this well (see case study boxout
Every privately held over years, over to the tender mercies of private equity. on page 31). It’s the reason why Chaney says that “owners
business will one One solution, in this situation, is to sell the business via a … want to make sure the business is passed to the right peo -
day change hands. management buyout (MBO). And as Printweek has high- ple who have its best interest at heart, rather than a third
lighted on a number of occasions, most recently with the
party whose intentions are much more difficult to predict.”
Whether through May buyout at Nottinghamshire direct mail and digital She adds, however, that “MBOs are also an option for
retirement, family printing business Eight Days a Week Print Solutions, MBOs larger businesses led by a strong management team who
have the skills, experience and the vision to take the com-
are nothing to be frightened of.
circumstance or pany forward without the continued involvement of the
death, ownership Defining an MBO current owners.”
will move on. Paul Taylor, a partner at Fox Williams, outlines that at its Why an MBO?
simplest, “a management buyout is the acquisition of a busi-
ness, in whole or part, by its management team”. It usually It’s perfectly logical that any route to sale is often linked to
Words by involves the provision of debt and/or equity funding by a the owner’s reason for selling and the structure of the busi-
bank and/or private equity investor.
ness itself.
Making a planned exit MBOs tend to involve a share acquisition where the man- That said, Taylor reckons that there is no correct route to
agement buys the entire issued share capital from the cur- exit, and the format very much depends on a number of
rent shareholders. variables. He says: “The current state of the business; the
“Sometimes,” as Taylor explains, “a new management appetite and resources of the management team; the attrac -
team will be brought in – an MBI – or other times it can be tiveness of the opportunity to debt and equity providers;
a mixture of existing and new management, hence the and tax structuring advice to name but some of the ele-
uniquely named BIMBO.” ments.”
But owner exits don’t always happen on the fly. In fact, It’s also an option to use an MBO where potential trade
Samantha Chaney, a partner in the corporate team at law buyers are limited in number or the seller is nervous about
firm VWV, has seen owner managers plan an MBO many approaching competitors and disclosing sensitive informa-

26 PrintWeek MENA October 2021 www.printweekmena.com