Management buy-out – mentoring the new team

Management buy-out. Six people in an office are having a discussion.

Staying calm and thinking carefully

Don’t panic! That was our key message to the new team heading up a management buy-out that happened to be working in the technically demanding nuclear component inspecting sector. Yet this is often the very best advice we can give to many SMEs – a step-by-step approach is more constructive.

Experienced and inexperienced

The company in this case was being bought out by three extremely technically competent managers from a retiring owner who had started the successful business 25 years earlier. The problems they faced were no experience of company finances, a need to raise new capital to fund the management buy-out, a poor understanding of the legal duties and responsibilities of owners, and also tax law.

Coaching and forecasting

Finton Doyle were able to help by taking individual members of the new team step-by-step through the whole owner/manager process, while also drawing up financial forecasts to support funding applications.

Devil in the detail

As accountants we project-managed the entire transition. This required us to sit in on key meetings with the new owners and their advisers, helping to select potential lenders, preparing appropriately detailed forecasts and explaining the present and future tax implications of a range of decision options. Our initial involvement was to be for six-months; we have now been working closely with the company and its now not-so-new owners for seven years!

Key actions

  1. Explained the legal, taxation and accounting responsibilities of running a company
  2. Prepared financial forecasts as part of the business plan
  3. Assisted with the development of management accounting systems

Key results

  1. New owners were able to make the transition from managers to directors
  2. Helped to secure buy-out capital and short-term loan funding
  3. Company is now thriving and has a profitable subsidiary abroad

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