Passing the baton

A family affair

A family company that was looking to transfer ownership from the third to the fourth generation. The current owner had just reached retirement age and was looking to fully exit from the business.

Looking to the future

The current shareholder required a capital sum for his retirement and the next generation of the family, who were already running the company, were keen to take ownership of the business to drive it forward.

At the same time, the junior (non-family) management team were becoming key to the future success of the business and a solution was needed to lock in the key management whilst incentivising and motivating them.

A strategic approach

It was clear from the offset that, while the family were looking to realise a cash sum, it was important that the business continued to prosper and that due care was taken with the welfare of the staff. As with all transactions, our remit was to secure the key objectives and ensure the softer issues were managed sensitively. This included aligning the vision of the junior management team with the family’s so they could see their future career and earning potential within the business.

Initially a strategic review was undertaken to determine the best option for the company and current shareholder. After considering several alternatives, the strategic review concluded that the optimal solution was to conduct an MBO. This would release cash to the current shareholder, transfer the shares to the next generation, and the junior management team would be incentivised through the use of share options.

 

By listening to the shareholders and taking all views into consideration we were able to develop a workable solution that achieved the key objectives in a tax efficient manner.

As part of our project management role, we developed a timeline with key milestones to ensure the transaction concluded in a timely and cost effective manner. Throughout the process, we maintained dialogue with all parties and monitored their progress towards achieving the end goal.

As WMT are well connected in the funding market, we prepared a detailed business plan that presented the opportunity to our extensive network of funders, appropriately, several offers of funding were received and we negotiated the best terms.

We structured the deal and negotiated the commercial aspects of the transaction between the family members.

A short period of due diligence was undertaken whilst lawyers prepared the relevant documents.

Throughout the transaction we kept all parties focused on the key commercial aspects of the transaction, which in turn resulted in a faster transaction and lower professional fees for the parties involved.

A well rounded solution

The retiring generation received a substantial lump sum and the next generation owned a significant majority stake in the company. The junior management team received some equity and were further motivated through the use of share options.
Since completing the deal, the company has substantially increased turnover and profitability.