This book is aimed at prospective and existing managers of a Management Buy-Out or Management Buy-In. MBO / MBIs are inherently risky with failure rate being relatively high. This book can increase your chances of success, by describing some common elephant traps, bad practices and risks, and how best to avoid them. Management Buy-Outs and Management Buy-Ins are a hi-octane part of the business world. It is a high risk: high reward arena. Metaphorically an MBO/MBI is like fitting an 8 litre V12 engine into an aged VW Beetle and expecting it to perform much better than before, or as someone more colourfully put it: 'a venture capitalist would expect that if you made love nine times in a night, the baby will arrive in 4 weeks'. Since 1991 I have experienced 8 such deals. They vary greatly: staggering success to the verge of financial oblivion - and fortunately back again. The deals have ranged across very different markets; from the highfalutin world of global drug discovery in mythical Tintagel to heavy metal bashing (Dustcarts) in the West Midlands. The deals have been backed by many different Venture Capitalists and financed by UK and international banks.
I have carried out a variety of roles across these deals: Chairman, Executive Director, Non-Executive director and as a personal Coach to a Managing Director. I have been very fortunate to have seen many MBO / MBIs through the prism of management since 1991. I have also attempted to make, what can be a serious and turgid subject easy-reading and on occasions perhaps almost entertaining!
Andy Nash began his career at Cadbury - Schweppes in 1978 after graduating in Economics and Geography from the University College of Swansea. He carried out a variety of sales and marketing roles at Cadburys progressing to Senior Management where he was ultimately responsible for the Tea and Coffee brands in the group. In 1984 he joined Sterling Heath Ltd., the OTC division of Sterling Drug Inc. as Marketing Controller. A year later, aged 29, he was promoted to Marketing Director. In 1987 he was headhunted to join Taunton Cider Limited on the main board as Commercial Director with responsibility for Marketing, Sales and New Product Development. During his time there the marketing strategies were radically changed causing sales and profits to increase substantially. This is demonstrated by the fact that, with two colleagues he jointly led a successful MBO of the company for "72m in 1991. A year later the company was floated on the LSE for "156m and then sold to another Drinks company in 1995 for "280m. He was the only director of Taunton Cider invited to stay with the enlarged group by its new owners, being appointed Managing Director of the Drinks division - Matthew Clark Taunton Ltd. As Managing Director of the "400m turnover company he successfully oversaw the post acquisition integration. In 1997 he decided to move on and pursue a career as a portfolio non-executive director. Since then, as a portfolio Chairman, he has acquired further extensive experience of MBO's, MBI's, turnarounds, & re-financings. At present he is Chairman of Merrydown plc (he led the successful rescue and turnaround in 1998), Photo-Scan plc, and a director of several other private companies. He is also Deputy Chairman of Somerset County Cricket Club.
Introduction 1 - The Market and some basic principles Why do a deal? Are you in the right shape? How an MBO/MBI works Volume and Value of Deals in the UK 2 - Finding a Deal How opportunities arise Conditions Precedent Public and Private Companies Research Marketing The Gatekeepers Individual or Team 3 - Getting in Shape for a Deal Graham Spooner's "Eight P's" Key Issues 4 - Doing a Deal MBOs / MBIs key differences Business Plan Advisors The Process Elephant Traps Due Diligence 5 - Board Structure and Behaviour Good Board: Bad Board Vendors Vacuum Board Composition Board Calendar Board Papers Chairman and Non-Executive Directors Communications 6 - Running an MBO/MBI What's changed? Hit the ground running Post-Completion priorities Unique Pressures Work-Life Balance 7 - Success or Failure What are your chances? Characteristics of Failure Drivers of Success The Work-out situation 8 - The MBO / MBI predictor / scorecard??? Which is better??? 9 - Real Deals Taunton Cider Maybridge plc Webbs Country Foods Ltd Tubex Ltd Cloverleaf Group Ltd Ashford Colour Press Ltd Dennis-Eagle Ltd 10 - Exit Desires of Management v their Contract with Investors Investor Expectations Importance of Timing Prerequisites Main Options Advisors 11 - 12 Golden rules 12 - After the Exit? Corporate Issues Personal Issues