Retirement and your exit strategy
Retiring from business was once taken for granted and by way of natural progression businesses were passed through generations of families. This is no longer the way and owners of businesses now have to take a more pro-active approach to retirement.
For some owners, finding a buyer and agreeing a purchase price are often the key terms involved. Following the recent economic downturn, the value of the business may not be what was anticipated or the buyer may not be able to pay or afford the price or pay by lump sum payment.
The actual structure of the deal differs little from a normal business sale and purchase, but there are a couple of other options or structures available to the owner and usually these are known as management buy-ins (MBI) or management buy-outs (MBO). An MBO, in very simple terms, is the acquisition of the company by the current management team who are supported by private equity investors. A MBI is similar but instead the management team comes from outside the company to lead the acquisition.
Planning for this can be vital and there are many different stages along at the way – heads of terms, due diligence, disclosure, a contract will be drawn up, warranties and indemnities will be negotiated. At Ironmonger Curtis our corporate solicitors have years of experience at developing an exit strategy and we have advised numerous clients on the various structures whether they are the party retiring or the new management team coming on board.