Jane and the Management Buyout Adventure
Jane was a very hardworking and ambitious young woman with dreams of owning her own business. She was so smart and hardworking that her boss had even given her a minority holding in the company to keep her from going off to work somewhere else.
One day Jane was called into her boss’ office and told that some big changes were afoot.
“It’s like this Jane,” said her boss, “our majority shareholder is looking to sell their shares in our business.
Jane’s heart skipped a beat. Her boss was rarely involved in the business, more of a ‘silent partner’, and she had been practically running it herself for years. She always had dreamed of all the things she would do if she ever became the majority shareholder and here was a golden opportunity.
“But how?” she thought to herself as she sat on the train on her way home that night. Despite all her hard work she was still only young and had very limited access to capital.
She arrived home feeling tired and depressed, but perked up when she saw her flatmate Accountancy Annie making a spaghetti bolognaise for their supper – her favourite!
“What’s up?” asked Accountancy Annie, “you look fed up.”
MBO Jane uncorked a bottle of red and sat down at the kitchen table to tell her friend about her predicament. Annie sat listened intently, her eyes lighting up.
“You need to talk to my friends O’Byrne and Kennedy,” she said.
Wasting no time Jane went to see them, and they quickly established a plan to help her realise her dreams.
They entered into a fixed price agreement that included analysing the business, its opportunities and the risk to any lender. They then set about designing a credible strategy and plan to approach a number of potential lenders.
“We would usually assist with the negotiation of the deal with the outgoing majority shareholder,” said O’Byrne and Kennedy as they sat working one night.
“Don’t worry;” said Jane, “I’ve already agreed a deal subject to me raising the necessary finance.”
“Coolio,” they replied.
O’Byrne and Kennedy assisted Jane in preparing her bank presentations, bringing out all the important points that they knew the lenders would worry about. They also used their banking contacts to line up a short list of potential lenders.
They worked so diligently that Jane was given three separate offers of finance. However, one offer stood out as it provided 100% of the finance secured solely on the company’s shares. A very rare thing indeed.
O’Byrne and Kennedy had convinced the bank that Jane was extra capable, that the business was sound and that their risk was low.
“Have you seen the trade press this morning?” asked Jane, as they chatted on the phone over breakfast.
“Yes we have,” answered O’Byrne and Kennedy, “It’s so unusual for a bank to lend 100% of the share consideration in a Management Buy-Out that they decided to splash it across their front page.”
“It’s all thanks to the business analysis you did at the start of the project. It really provided focus and it’s even given me a better plan to develop the business.”
Since then MBO Jane’s business has grown from strength to strength and she has paid back her debt to the bank.
O’Byrne and Kennedy stayed involved with Jane’s business for years to come. They have since taken other potential business owners through this Management Buy-out process, and Jane always acts as a source of reference for others thinking of using O’Byrne and Kennedy to help them.