“When embarking on a management buy-out it is important you try before you buy” – a wise piece of our advice from our client at Vinyl Solutions.
Our client’s challenge
The senior team at Vinyl Solutions undertook the management buy-out as the business founder was looking to retire. He wanted to step back from the day to day running of the business but was keen to continue to have an involvement and he has remained as a minority shareholder.
The two directors undertaking the MBO realised that, although quietly successful, the company wasn’t maximising its potential. Ben Hart, new to the industry, saw an opportunity to turn the business into a much more commercial and client focused organisation.
The legal challenge
Ben joined Vinyl as a director in August 2016, although Nigel has been with Vinyl many years before he was appointed as a director in May 2012.
The buy-out was structured through a combination of loan notes and equity in the buyout vehicle.
With many MBOs there is the challenge of trying to provide the outgoing shareholder with sufficient protection in relation to the business (particularly whilst the loan notes are outstanding) and allowing the management team to have the freedom to drive and develop the business. Therefore, careful negotiation was required.
Making it happen
During the MBO process we got under the skin of the business to really understand it, how it worked and to get to know the management team’s vision and aspirations. As well as project managing the transaction we were on-hand to negotiate the documentation and help the directors understand what they were signing up to.
The right outcome for our client
The result is that the management team have been given the freedom to develop their business as they had hoped and they are on track to exceed expectations. Since the MBO, the business is growing from strength to strength.
“Where other law firms can adopt an aggressive approach, David Bright and his team are kind and supportive, continually going the extra mile (including taking calls at 10pm!). We felt 100% supported throughout the buy-out process. I can’t imagine ever using another law firm.” Ben Hart, MD, Vinyl Solutions