5 You still need a boss Many people who have successfully completed an MBO will tell you how great it is to be their own boss – but if you have multiple shareholders in an MBO team you could quickly find that you have a whole team full of ‘bosses’. It is important to remember that you must retain a structure, and part of that is having a leader in place who is empowered to make decisions. 6 Decide who you want to borrow money from When setting out on an MBO the impetus to get the capital in place to make the deal happen can often over take the question of who the right person is to borrow from. After all, MBOs are partnerships, between the MBO team, your advisers and your lenders. There are a number of ways to raise finance, via a bank, a private equity house or even from family and friends, but it is critical to remember that each lender will have a different approach and set of expectations and you need to decide what is the right approach for you. 7 Be prepared to make difficult decisions As the adrenaline kicks in it is easy to get carried away with the idea of owning your own business – but beware, the transition from employee to owner is not always as easy as you might think. As the adage goes, with great power comes great responsibility and this can mean having to make difficult or unpopular decisions for the good of the business. You need to ready yourself to take accountability when something goes wrong or even when resources have to be cut. Having a “critical friend” to use as a sounding board can help you take an objective view when things get tough. 8 Surround yourself with the right team Banks, accountants, solicitors and even HR and PR advisers are all critical to making a deal happen. Those people who have been through an MBO will often tell you that, whilst the end result is worth every ounce of blood sweat and tears, they didn’t expect the process to be so challenging. Not only do you need qualified professionals to make sure you protect yourself and the business, but what can really make the difference is surrounding yourself with a team of people who can work collaboratively and who truly understand what it is you are trying to achieve.
9 Manage your messaging When you are living and breathing a project it is easy to forget that people on the outside – like your clients – don’t know as much about what’s going as you do. Creating a PR plan early in the MBO process which tackles, when, how and with what information you are going to give your customers can be crucial to retaining their business and protecting the reputation of your brand. Any change in management can lead to uncertainty. Managing your message to both customers and staff is an important factor in ensuring that your clients feel confident to continue to place their orders or engage your services and key staff remain in place to service them. 10 Keep the faith, but keep your cool MBOs are often fuelled by passion, either by an individual’s, or a team’s belief in a business or organisation. It is not uncommon that family members such as spouses and children may become involved in an MBO as shareholders or interested parties - which can increase the levels of anxiety in an already stressful situation. MBOs can be lengthy and frustrating and it is important to separate your heart from your head. Being passionate about what you are doing will get you through the tough times, but taking a logical and long term view of the project will get you the best deal. If you are thinking of embarking on a management buy out process, or need help with a business transition such as a merger or acquisition, please get in touch with one of our professional advisers. Contact Sue Gull on 01473 267000 or email sue.gull@scruttonbland.co.uk www.scruttonbland.co.uk
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