Solicitors for a Management Buy Out

A Management Buy-Out (MBO) is a transaction where a company's management team acquires ownership of the business from the existing shareholders. This allows the managers to become owners and steer the company in their desired direction. MBOs can be attractive for both the management team and the sellers, offering potential benefits like:

• Management team - increased autonomy, control, and potential financial gain.

• Sellers - clean exit strategy, continued value creation (through ongoing relationships), and potentially higher price than traditional sale.

How does an MBO work?

The usual steps involved are :-

• Planning and Valuation - the management team, often with advisors, assesses the target company's value, feasibility of the buyout, and financing options.

• Funding - secure funding to purchase the company, typically through a combination of debt, equity, and personal investment from the management team.

• Negotiation and Due Diligence - both parties finalise the transaction terms and conduct comprehensive due diligence to uncover any potential liabilities or risks.

• Legal Documentation - including the share purchase agreement, loan agreements, and shareholder agreements.

• Completion - the transaction is completed, ownership transfers, and the management team takes control of the company.

How We Can Help

We advise both management teams and business owners on every stage of a management buy-out, helping ensure the transaction is commercially sound, compliant, and structured to meet your goals.

Our services and experience includes:

• Initial advice: Assessing whether an MBO is the right route and identifying potential funding options.

• Structuring the deal: Advising on ownership, control, and governance structures that protect your interests.

• Negotiating terms: Supporting negotiations with owners, investors, and lenders to secure a fair and practical outcome.

• Drafting and reviewing agreements: Preparing and advising on sale, purchase, financing, and shareholder documentation.

• Managing risk: Ensuring compliance with directors’ duties, financial assistance rules, and disclosure obligations.

• Completion and implementation: Co-ordinating closing steps to ensure a smooth transfer of ownership.

Recent Examples of Client Instructions

• Our Corporate team acted on behalf of the management team in the purchase of part of the business and assets of a commercial property group incorporating vendor and management funding with external debt finance, Investment Agreements with the vendors incorporating minority negative controls.

• Our Corporate team acted on behalf of the vendors in the sale of a majority shareholding to the management team, whilst retaining a minority shareholding and continued involvement in the business, incorporating negotiations for the amendment of detailed change of control provisions within critical external contracts.