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Robertson & Foley routinely helps management teams acquire their divisions. We complete both leveraged and equity sponsored buyouts.
Leveraged buyouts (LBOs) utilize a relatively small amount of equity in the capital structure. For these purposes, LBOs rely on management's equity and non-dilutive debt to pay for the acquisition. This strategy maximizes the management's equity position, but is offset by a fair amount of risk.
With an equity sponsored buyout, management partners with a private equity provider to complete a transfer. These buyouts tend to employ more conservative capital structures than LBOs. Therefore, equity buyouts are less risky than LBOs, but also offer less ownership to the managers.
Several financial engineering skill sets are required to close management buyouts. First, a deal must be negotiated with the parent. Of course, this involves employing proper valuation and negotiating techniques. Next, an effective capital structure must be architected and effected. Finally, working terms, such as shareholder and employment agreements, must be negotiated between the various parties.
The principals at Robertson & Foley possess the skill sets necessary to successfully offer turn-key management buyout services.