Buying the Company You Already Run
Compared to transactions involving a third party buyer, Management Buyouts (MBOs) create the least amount of disruption and risk to the company, the seller and any financial partner. However, the management team in a small business is typically undercapitalized and has little knowledge of how an acquisition can be completed – they require special assistance to close a deal.
The DVS Group has successfully managed multiple MBOs. We understand the delicacy of internal negotiations and the interdependency of the parties – because we are small business experts, we know how to be an effective facilitator for all necessary conversations.
We have the experience and connections that are needed in designing creative transaction structures and sourcing financial partners for lower middle market MBOs.
We generally discuss what geography, industry, and size of company is most appealing to you and compare those to your capabilities so we can realistically discuss what we think the odds are of a successful engagement.
We’ll take your criteria from the initial meeting and use it to query companies that could be a good match. We use various databases (mostly Salesgenie and Hoovers) to build lists that we then begin to research for all available details.
Negotiate the proper fee structure after explaining the scope of work. Let’s be sure we understand how to define a successful engagement.
Iterate through research of companies to assemble the best knowable prospect pool.
Send direct mail and personal outreach (where feasible) to targets. Also, we request referrals from our network for good prospects.
We ask for all pertinent financial information available to begin an assessment of the company’s market value using the same lens as bankers and professional investors.
We try to find out early whether we are even in the same ballpark with the seller’s expectations. Often, we aren’t, and so we try to move on quickly when that’s the case.
Generally involves several rounds of fine-tuning the terms of the deal, e.g. seller financing, working capital, transitional post-closing assistance, etc.
DVS coordinates the resources necessary to perform due diligence and close the transaction: bankers, lawyers, accountants, appraisers, environmental auditors, etc.
In parallel with due diligence, the final purchase documents will be written to address all details of the transaction.
Coordinate final signing of definitive agreements and assist with post-closing adjustments.