Case Study

Management buyout expertise

Management buyout transactions often involve complex structure. Using our experience, we work with the management team to streamline the process and effect completion with minimum cost. An MBO is different to the majority of corporate transactions, and thus experience is key.

Solicitors for management buy outs

Below are some examples of our recent work.

Management buyout of a global haulage company

  • We acted for a well known institutional lender on its financing of a management buyout in connection with a global haulage company. Under the terms of the transaction, part of the purchase price paid to the selling shareholders was being deferred. This was by way of the issuing of a loan note. As some of the purchase price was deferred, we needed to ensure that the lender’s interest was protected following completion of the sale.

Protecting the lender’s interest following completion

In order to achieve this, we drafted legal charges and a debenture. This was to provide security against certain properties of the business and the business itself should the borrower be unable to make a payment. We also ensured that following completion, the lender’s funds were repaid to the lender before the loan note holders. We negotiated the terms of the loan note and drafted an inter-creditor deed. This set out the order of repayment of loans. The inter-creditor deed was drafted to ensure that the lender was a preferred creditor and that, coupled with the security documents, provided sufficient comfort for the lender to release funds for the management buyout to take place.

Management buyout of a fintech company

  • We acted for the selling shareholders of a challenger bank following its huge growth in its first few years trading. One of the keys to ensuring a swift and smooth transaction is to make certain that the due diligence process is managed effectively and sufficiently for the type of transaction. Often, a benefit for selling shareholders in a management buyout is that the provision of due diligence and certain buyer protections often found in the key transaction documents can be reduced. This limits both time and risk of the selling shareholders. The reason for the reduction is because the buying shareholders have a greater knowledge of what they are buying. Therefore, they are unlikely to require as much information or protection about the company they are buying.
  • Surprisingly, in this instance the buyers took the unusual stance of asking for vast amounts of information that they most likely already had. Furthermore, our clients were also asked to provide a full suite of warranties typically found in a share purchase in which the buyers were not already part of the management team of the target. This increased the risk profile of the transaction for our clients.

Management buyout outcome achieved

Using our extensive knowledge of management buyouts and shrewd negotiation, our lawyers successfully reduced the amount of due diligence that our clients were being asked to provide. We also reduced the risk exposure faced by our clients as we successfully negotiated a reduced suite of warranties. That, coupled with us negotiating a reduced cap on our clients’ liability should there be a breach of any warranties resulted in a very happy client!

Management buyout structure with different classes of shares

Acting for the management team of an invoice financier on its MBO in conjunction with a private equity fund. We created numerous classes of shares in NewCo. This ensured that the management team held shares with different rights to those shares held by the fund.

Management buyout for restaurant group

Advising the management team of a restaurant group on its MBO. Together with, the creation of numerous group companies for the purposes of seeking debt finance from banks.

Post management buyout investment agreement for management team

Preparing a post-completion investment agreement for the management team following the completion of their MBO of an enforcement agents. The agreement permitted the management team to subscribe for further shares. The shares were at a “sweat equity” value providing the target met certain financial projections.

Employee incentives for management buyout recruitment company

Creating a pool of EMI shares in NewCo prior to a management team’s MBO of a recruitment company. The pool was created to incentivise those employees placing candidates into roles with employers in the natural resources sector.

Helen Curtis

Dual-qualified in the UK and USA and a qualified solicitor since 1998, Helen is a partner and heads up the corporate team, advising start-ups, SME companies, partnerships, entrepreneurs, investors and shareholders.

Let us take it from here

Call us on 020 7438 1060 or complete the form and one of our team will be in touch.