Private Equity & Management Buy-outs

Course Overview

A private equity financed management buyout and a subsequent exit via flotation or trade sale is a very high risk/high reward exercise suitable only for well motivated and entrepreneurial management teams.

This course explains the objectives and roles of the entrepreneurs, financiers and advisers involved and the manner in which a successful transaction can be structured and achieved. The financial instruments employed are examined in detail together with the overall structure of the deal.

Course Content

Background

• Background to private equity
• Different types of transaction

 The MBO decision

• The vendor’s perspective
• Preparing the management team
• Valuation
• The management’s perspective
• How much should the MBO team invest?
• What percentage equity should they get? 
• Suitability of the business for an MBO
• Essential attributes

The parties and their roles

• Private equity house
• Internal structure
• Expectation of warranties
• Reporting accountants
• Identifying risk
• Tax planning
• Solicitors
• Acting for the private equity house
• Acting for the vendors
• Acting for the MBO team
• Acting for the lenders
• Insurance and pensions decisions

Structure of an MBO deal

• Sweet equity, quasi equity & ratchets
• Legal documents required
• Senior debt
• Nature of core acquisition loan
• Use of revolving credit facilities
• Bullet & balloon repayments
• Stretch debt & alphabet notes
• Contents of a Debenture Deed
• Position of second lien debt
• Junior debt
• Application of PIK
• Reasons for vendor loan notes
• Mezzanine debt
• High yield bonds
• Additional complexities of P2P deals

 Exit routes

• Planning from day one
• Likely conflicts of interest
• Trade sale
• Share buy-back
• Second round buy-out
• Flotation

“Good examples which made the material understood deeply”

Delivering this course in-house for you to a number of participants could be very cost effective. Please call us on 020 7387 4484 to discuss this further.

If you have any questions about this seminar please write to us at post@redcliffetraining.co.uk.