News & Resources
Welcome to Part 3 and our final post on the Considerations in a Management Buy-Out (“MBO”) series, Roles & Responsibilities & Shareholder Agreements.
As a follow up to our blog on “Striking a Balance” in a management buy-out (“MBO”), we concluded that structuring a deal is critical to its success.
A management buy-out (“MBO”) is an effective succession/exit strategy where an Owner wants to reward its core management with an equity stake in the business for the future, while being able to crystalize their own investment.
We developed a guide that covers topics on the MBO process from both the management and shareholders perspective.
The success of the deal now hinges on ensuring working capital targets, and any potential adjustments, satisfy the interests of both the buyer and seller. It doesn’t matter how big the deal is, at some point, and perhaps initially with no apprehension, you’ll encounter a discussion about working capital during the M&A process.As advisors we have routinely witnessed the problems that arise from failing to appropriately negotiate working capital targets early in the process. These problems can limit the ability of both parties to come to consensus in other areas of negotiation and can ultimately have profound impacts on the final sale price of the company.
You have received an offer for your business based on a multiple of EBITDA. What is EBITDA and are you sure the multiple is right?
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