Cole Associates' team has many years of experience
in advising a wide variety of clients, across many different sectors,
in the UK and overseas. Our services include:
Plans and Financial Projections
Strategic Business Advice
Interim Finance Director
MBI opportunities typically comprise someone in
senior management (or a team) coming out of a large company, looking
for an entrepreneurial challenge to acquire and run a smaller business,
often in the same sector. Alternatively, it may be 'serial entrepreneurs'
who, having successfully sold one business, want to acquire another.
The companies targeted for acquisition by MBI teams
will generally be in a similar situation to the MBO prospects, either
a family-owned business coming to a generation change with no family
succession, or a group of companies looking to sell a division or
subsidiary. It is fairly common for a buy-in team to join forces
with a buy-out team, where there are complementary strengths and
skill sets in the respective teams. The unfortunate abbreviation
for this combined transaction is a 'BIMBO' (buy-in/management buy-out).
As with an MBO, the essence of the 'financial engineering'
behind a successful MBI is to borrow almost all the necessary funds
for the acquisition from banks and venture capitalists, then to
use the company's future profits and cash flows (which should be
growing) to repay the debt, thereby enabling the MBI team ultimately
to sell the business debt free on a multiple of the higher level
of profits. Again, as venture capitalists take more risk than banks,
they look for a share of the ownership (ordinary shares), which
dilutes the MBO team's ownership somewhat.
Cole Associates' role in an MBI is as follows.
If the target company has not yet been identified:
MBI team to define the acquisition criteria, often based on their
relevant industry experience.
to identify a list of potential targets that fit the acquisition
criteria and obtaining information on each of them.
the owners of the target companies on behalf of the MBI team,
to determine the their appetite for disclosing information and
entering into discussions.
information provided by the owners, and assessing the relative
merits of different target companies.
When a 'preferred target' has been identified, Cole Associates'
role is similar to that for an MBO:
To determine whether the vendor's price expectations are sensible,
and if there is a realistic prospect for funding the MBI.
MBI team in the preparation of their Business Plan and financial
projections, setting out their strategy for the business.
Advice on the
most appropriate funding structure (i.e. the mix of debt, venture
capital, finance leases, grants etc).
the funding opportunity to a selection of appropriate funders
Assisting the MBI team in presenting their proposals to the funders.
with the funders, to obtain the funds on the most advantageous
terms possible for the MBI team.
the preferred funders' throughout the remaining stages of the
investment/lending process, including due diligence and legal
agreements, through to credit approval.
with the vendor:
pricing and tactics.
on behalf of the MBI team, to acquire the business on the best
the lawyers to agree the legal documentation.
managing the transaction:
Coordinating the activities of all the parties and closely managing
the critical path, to facilitate a prompt completion.
At every stage of the buy-out, Cole Associates' advice is directed
solely at the MBI team, never at the vendor or funders.
If you are considering an MBI we would be happy to run through
our unique 7-stage financial feasibility review model, to provide
you with an initial indication of the prospects for a successfully-funded