CASE STUDY
Berkley Group
MBO | MBI
We were aware of the Berkley Group recruitment company for several years, and we had used Berkley for a number of hires for a previous company. They were owned by a UK plc that had a few different recruitment companies under their brand. The original founders of Berkley had exited the business and it was being operated by local management.
So, we approached the local management team to discuss if they had an appetite for an MBO. The answer was ‘yes’.
First Hurdle Good Management Team to work with
Due Diligence
We worked through the opportunity with the local management about how to reset and grow the business. Once we were happy that we had a solid business case, we as a team were able to execute and grow the business in line with a proposed strategy.
Second Hurdle Can we add value to the business and drive further ‘Enterprise Value’
Negotiation
We then approached the owners with the Management team to express our interest in buying out the business. Once they agreed to enter negotiations, we put together our negotiation team and parameters that we were happy to work with. After a period of negotiation around Enterprise Value and structure was agreed.
Third Hurdle We now had a willing Seller
Transaction
We then established a debt funder that was happy to work with us and support the buy-out based on the business case/team/solid business performance and consistency of Cash generated. We then addressed the balance of funds with an ‘Equity Cheque’. The challenge for all such transaction is the need to address a number of moving parts:
- Debt Funders – We have strong relationship with key debt funders in the market and agreed to work with a partner that understood the business.
- Equity Funding – We provided the equity funding in association with Management
- Legal Process – this is an area that requires significant attention, and it is important that you have a team of lawyers that you trust as this can have a significant cost if the transaction does not close.
Fourth Hurdle Transaction – Funding and Legal in place.
Operations
In any business, we always need to bring value-add and help grow the company so that all Shareholders can get a sufficient return.
Once the plan is in place, it is essential to focus on execution and doing so to bring value into the business quickly.
