Management Buy-in Financing
“I couldn’t have wished for a better advisor.”
— Simon Reid, founder of Fusion Medical Animation, the world’s only EMMY and BAFTA winning 3D animation company for the pharma and healthcare industry with clients including Unilever, Pfizer, Samsung and Astrazeneca.
If you’re part of a management team looking to acquire another business, you’ll no doubt need to secure funding to complete the purchase. At Accelve, we want to make this process as stress-free as possible for you, which is why we offer a comprehensive financing package that includes equity finance, bank debt, mezzanine finance and other forms of finance that will support a compelling offer to the vendor. We will also support you throughout the process, from evaluating your MBI strategy and advising you on the most suitable options, to presenting your proposal to the right funders and managing the entire closing process.
Evaluating your MBI strategy
To make sure your MBI plan is robust and prepared for any questions from funders, we will conduct a full review and advise on any vital aspects that are missing to ensure your proposal is viable for MBI finance. This includes an evaluation of your business and an assessment to determine the alignment of your leadership team, as well as how you optimise your financial modelling and forecasts to make sure funders have complete confidence in your business and its future growth potential, following the MBI.
Creating your Investment Proposal
Following the critical review of your MBI plan, we will then draft a funding proposal that incorporates the most valuable information about your company (ie. its business model, operations, strategy and financials). The best investment proposals answer all the critical investor questions so that the potential funders have a clear and concise understanding of your business and its strategy, without needing to request more information.
Approaching Funders on your Behalf
As soon as we feel you and your business are investor-ready, we’ll start contacting potential funders who we know are well-suited to your MBI proposal. Just this aspect of our service alone will save you considerable time and stress, as the funding market can be overwhelming if you don’t know where to start or how best to approach the community. We will be sure to keep you informed with all communication and advise you on the impact of each financing package offered so you can make the right informed decision for the management team and the business itself.
Negotiating the Best MBI Financing Package
Our vast M&A deal experience allows us to provide you with technical knowledge and tactics to negotiate optimal commercial terms and to determine how much existing equity to roll over, and how much equity and value you could ultimately receive at the next exit point. As we often know the people behind these funds, we will also share our views on softer factors, such as the reputation of the backer, as well as their approach and style of dealing with portfolio companies and the likely chemistry fit with you.
Throughout the MBI transaction, we provide clear and instructive advice and offer hands-on support for all your needs, including your financial modelling, business planning and presentation requirements, to make sure we impart the best impression with your potential backer. We will also support you in answering the funder’s questions and provide additional value by managing the funder’s due diligence process on your business.
Managing the Closing Process
Once a final offer has been agreed, we will continue to provide confidence and value by facilitating the closing process, which includes completing all the necessary legal paperwork. As soon as the contract has been signed, you will receive the MBI funds into your company bank account.
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FAQs
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Raising finance in this context is related to the specific purpose of securing funding for your business. This could be for a variety of reasons, including to acquire another business, for a particular growth project, to complete a management buyout (MBO) or to complete a management buy-in (MBI). The process of raising finance doesn’t need to be complicated, but it can be very time-consuming, overwhelming and expensive if you don’t know what you’re doing. This is why it’s strongly recommended that you work with a professional advisory firm, such as Accelve.
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There are four crucial steps that need to be taken to ensure you successfully secure the right amount of funding for your business. These are:
1) Draft a robust business plan that considers all the key aspects of your business and its future objective/s.
2) Create an investment proposal that reflects your business plan and answers all the critical investor questions.
3) Approach the most-suited potential funders as part of a competitive process.
4) Negotiate the best terms and manage the closing process professionally.
Funders need to have complete confidence in you and your business, from the moment they are approached to the very end of the process, so it is vital that you work with a professional advisory firm that you can trust to skilfully guide you through every step.
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We help any business with an EBITDA of £1 million and up, with funding needs in excess of £2 million. The business also needs to be profitable with good visibility of cash flow so that it can support the finance structure required. We also help high growth startups - see early stage startup funding section.
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Over the last 20+ years of working in corporate finance, we have built up a vast number of trusted relationships with equity and debt providers across the globe, including traditional private equity, venture capital, banks, mezzanine debt, asset-based lending, as well as alternative funds, such as family offices and individual high-net-worth investors. As such, we pride ourselves on being able to source all suitable options and advising you on the best funding package for your business’s needs.
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Whilst most funders will ultimately want to know and often speak to the the people running the business, they can be frustrated when they are approached directly and then have to waste time asking for missing information or discover that the business itself isn’t completely investor or lender-ready. Funders appreciate it when they are advised by a professional advisory firm as they know that the proposal will be well-prepared and that the business would have been advised accordingly. When we approach investors and lenders, they immediately know that they will be saving time and money when assessing the information we provide them. This positive first impression also helps to secure you the best terms for your funding package.
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There are several reasons why some businesses aren’t successful in raising finance, with the most common ones being:
- Poorly prepared as a business for funder scrutiny
- Unable to clearly articulate your business plan
- Incomplete or inconsistent financial information, including forecasts
- Not clear on the value proposition and value drivers
- Missing information about the business’s performance and risks
- Funding proposal that doesn’t include all the required information
Ultimately, as soon as a bad first impression has been made, it becomes very difficult to gain the investor’s full confidence in you and your business and expect them to part with their money. This is why we strongly recommend that you work alongside a professional advisory firm, such as ourselves.
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Yes, absolutely. Before we reach out to any funders, we make sure that you agree on who we are going to approach. This includes discussing any potential investors and lenders that you’d like us to consider. You ultimately decide who will be the preferred funder, we simply use our network and experience to suggest the most suitable backers.
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We have no doubt that your investment will pay for itself (and more) in terms of saving you a considerable amount of time, money and avoidable stress. This is because you will have:
1) a much higher chance of securing your required finance to start with,
2) we will also negotiate the best terms and drive down costs, and
3) you’ll have complete peace of mind that your business will be positioned in the best possible light so that you receive the right funding package for your business.
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Yes, your core management team should be able to carry on the business as usual. Potential investors and lenders will want to know that your leadership team is aligned and stable, otherwise this can pose a risk to the valuation process and therefore the finance needed.
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Private equity firms tend to work closely with the management team of the businesses they’ve invested in to ensure that the company’s performance and strategic direction is constantly being reviewed, with the necessary improvements made.
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In addition to the capital itself, business owners typically benefit from the private equity firm’s connections and deep sector knowledge/expertise, which helps them grow exponentially and gain more market share. On a more personal level, business owners can realise some of its value and reduce their level of engagement, yet still continue to reap the benefits of its future success.
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Whilst we have specific sector knowledge as a result of the different deals we’ve made happen, we work with many different sectors, so our experience remains very diverse. This naturally means we bring unique insights to our clients, helping them to create robust business plans and completing the deals they want.
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Our fees vary depending on the scope of the engagement. Our corporate finance related fees tend to have a large component which is based on the success of a transaction completing. Our strategy advice fees are normally charged as monthly retainer fees or charged on an adhoc time basis. Our fees are always tailored to your specific needs, ensuring we are completely aligned.
A selection of brands our team have worked with
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