Why LPC?

Management Buyouts

How it Works

As part of a senior management team, you are intimately familiar with your business and know how to take your company to the next level of success. At the same time, current ownership might not be motivated to commit the time, effort and capital needed to maximize growth. In this situation, a management buyout (MBO) may be the right option for everyone.

In an MBO, Long Point will back your team’s acquisition of your company, providing current ownership with liquidity and putting you in a position to lead the business as operational leaders and equity partners.

We will help you acquire the company using a combination of debt and equity capital. While Long Point will provide the majority of the equity, we will look to you and your team to make a meaningful investment in the business that is in line with your personal financial resources. In addition to your equity investment in the company, we will put in place a performance-based equity incentive plan that will further align our interests in growing the business and create a significant wealth creation opportunity for you and your team.

A Delicate Touch

Proposing the Deal
Completing an MBO is a sensitive process. Even proposing a transaction to an owner should be handled carefully. It is critical that if ownership is not interested in a sale, you and your team are not placed in an awkward position. Long Point will work with you to prepare and communicate your proposal so that deal or no deal, there will still be mutual trust and respect.
Managing the Transaction Process
Even after management has expressed interest in an MBO, the process needs to be managed with great care. Negotiating the sale of a closely held business can be an emotional process for all parties involved. Moreover, it is common in an MBO that both the seller and buyers do not have experience with similar transactions. As the parties have their first exposure to the normal give and take of an MBO negotiation, it is possible and even slight miscommunications can cause friction and cause the process to become emotional.
We know that it is as important for your team to maintain a positive relationship with ownership as it is to close the deal. If for some reason the transaction does not close, your team needs to have confidence that your career trajectories will not be impacted.
Long Point’s approach is to over communicate with all parties throughout the process. It is critical that both the buyers and the seller understand not only what the other party wants, but also their rationale for wanting it. In our experience, the more each side understands about the other’s thinking, the lower the risk of friction or anyone perceiving that they have been treated unfairly.

Managing the Business

Following the closing of the transaction, our joint focus will be on driving profitable growth and creating value. Prior to the close we will work with your team to build a business plan that addresses short, intermediate and long term priorities. That way, when the deal closes we will have already reached agreement on how to move the company forward and can focus on executing the plan.

While we will work collaboratively to develop and pressure test the business plan, we are firm believers that the plan ultimately has to come from you and your team. You know the business better than we ever could and it’s your knowledge and effort that will make the company a success.