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The Mbo Process

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MBO

The management buy-out process can last anywhere from three months to a year or even more. The following are the steps involved in a typical Management Buy-out. However, in some cases, some of the steps may not apply and also the order does not necessarily indicate the timing. A lot of issues outlined below would be dealt with simultaneously.

STEP 1 - Initial Consultation (confidential "no fee" consultation)

STEP 2 - Making the First Approach
Who within an organisation to first approach about a possible MBO is vital. Generally speaking, you will have a good idea who the most approachable person is. Of course, it may be a case that the existing shareholders / management have approached you with a view to considering an MBO (considering an exit?). In the extreme case if you approach the wrong person they immediately may regard you as a threat and this could have consequences for your existing position.

STEP 3 - First Approaches and Completion of Confidentiality Agreements
In order for you to be able to talk to your professional advisors, the target company will require you to sign a confidentiality agreement so certain information can be released to your professional advisors and yourself.

STEP 4 - Deciding on the MBO Team
Generally, MBO's are driven by one to two senior management. An important part of the process which we will assist you in is to try to determine what other key members of the management team you should include. The seller will generally appoint their own advisors to assist them in the negotiations. The possible negative effects of not choosing certain members will have to be examined and the split of shareholding between the management team will have to be agreed. It is probably best for the main drivers of the MBO to go as far down the process as possible before introducing other key members of management.

STEP 5 -

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