There is no single model for management buy-outs and buy-ins. Whether you are the seller of the shares in or assets of the target company or the buyer, through a newly formed company for that purpose, we will advise you all the way through to a successful transaction.

Like all corporate transactions there will need to be an exercise of due diligence and negotiation but the issues can be complicated by reason of the knowledge of the management and their interests in the target. Often the demands made by the financial investors and lenders in the transaction for warranties and security of funds will require careful handling. How will the funds be raised and then applied or secured? Does the raising of funds require a prospectus or an investment advertisement, each of which are heavily regulated by statutory provisions? Will you need to enter into a lock-out agreement? What warranties should be sought or given and will the lenders agree to them? Prohibitions against the giving of financial assistance? Will the debts of the target be reorganised and does this give rise to insolvency issues and unlawful preferences? How should you structure the shareholdings in the bidder company with appropriate ratchets and other mechanisms to ensure that the correct balance of interests between management and financial providers is achieved? Can the contract really be avoided simply because the directors failed to get the shareholders in the holding company to agree to sanction the proposed deal?