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Acquisition and sale of businesses


Why opt to pursue a company takeover?

A takeover is often performed for strategic reasons. An acquisition or merger can allow a company to expand its product range or enter new markets. It can also often enable the business to generate more turnover with less overhead.

Developing products or markets independently or trying to grow autonomously can be a time-consuming investment with a certain degree of risk. Buying an existing business is often much easier than building a business from scratch. There is a customer base, knowledge and experience, and the company often already has some name recognition. Of course, integrating companies or adapting cultures also requires a lot of work.

Support with a company takeover

The decision to bring in new management or sell a company is often postponed. Since it can be difficult to assess the tax and financial consequences, decisions are often delayed. The social and psychological aspects of a takeover also play a part in the process. Good communication and a willingness to discuss matters openly and honestly, and with clarity, are important conditions for a successful takeover. The timely involvement of an independent consultant can help ensure the smooth progress of a takeover; it reduces the chance of setbacks during the process and this is vital, because trust makes or breaks the process.

Taurus as your takeover specialist

The reasons for using Taurus vary from company to company, but the greatest common denominator in any company takeover is a lack of experience and expertise. Taurus offers companies the opportunity to test the basic principles and to discuss realistic expectations with experts and specialist advisors. Our involvement also allows entrepreneurs to keep a distance during the takeover process. Moreover, they can continue to concentrate on the company so that turnover and results do not suffer from the acquisition process. Taurus assists companies in this process, with our services always customised to each individual circumstance and results delivered.

Want to know more about the takeovers Taurus has supported? Click here for some company takeover references.

Management buy-ins

A management buy-in (MBI) is a particular form of buying a business. An MBI candidate wants to acquire the company and then take over the management of the company. An MBI always involves a 'private' buyer from outside the company. This is the essential difference compared to a management buy-out, where the buyer is an existing employee within the company.

Why a management buy-in?

A management buy-in (MBI) is often pursued by managers who are still employed but would like to take on the challenge of being an entrepreneur themselves. Building a business from scratch is a significant challenge. An MBI can be the perfect way to get a flying start.

The advantage of an MBI candidate for the selling party is that the new owner will work for the company with ‘everything they’ve got’. For the existing owner, this often means a clear picture of the future of the company.

Financing a management buy-in

Financing the purchase price is often a crucial challenge in an MBI. Because the candidates have often previously worked as salaried employees, they frequently have limited personal capital available. MBI candidates often have to take over a company with the help of an external financier. Banks [may?] contribute up to 65% to 70% of the financing. Therefore, a management buy-in often involves combined financing from:

  • Bank loans (maximum of 65% to 70%);
  • Private equity parties;
  • Informal investor(s);
  • Family and friends;
  • The former owner of the company;
  • (Limited) capital contribution from the buyer themselves.

In the case of a management buy-in, the entire financing, including interest and repayment, must be repayable from the available free cash flows within five years.

Support on a management buy-in

Taurus has many years of experience in supporting management buy-in processes. We can not only assist you in finding the right company to acquire, but also the appropriate external financier(s) with the most favourable conditions.

Management Buy-outs

In a management buy-out (MBO), a company employee acquires the company from its existing owner. An MBO is often a good solution for companies with no family succession. It can be a good alternative to selling to third parties, as an MBO often gives the existing owner more insight into the future of the company. An MBO differs from an MBI in the fact that an MBI involves a buyer from outside the organisation.

Why a management buy-out?

Organisations will opt for MBOs for a variety of reasons. For example, an organisation may want to divest certain group entities in order to be able to focus entirely on its core business.

However, an MBO is usually considered when the existing owner has significant confidence in an employee, giving them reassurance that they are leaving their company in good hands.

Financing a management buy-out

An external financier is often vital to a successful management buy-out. The employee will often have worked as an employee for many years, which often means they will have only limited personal capital available.

Since a bank loan can only cover part of the financing, combined financing is often sought from e.g. informal investors, family and friends or a private equity party. In addition, the existing owner is often called upon to finance part of the purchase price. Because the current owner has confidence in the takeover by the employee, there is often more willingness to provide such financing.

Support on a management buy-out

Considering an MBO? Feel free to contact us! Our specialists will be happy to explore the possibilities together with you. Taurus has the appropriate support for either a full or partial management buy-out; we are here to help.

Types of acquisition

There can be various reasons for a takeover. The different reasons always result in different items of attention and require different expertise. That is why proper support during the takeover process is vital.

Takeover within the family

In such cases, the business is often transferred from parent to son or daughter, for example. However, there are other aspects to consider in a family takeover. Business and private life can be more difficult to separate. There can be more emotional factors at play and the highest price may not be a factor.

Nevertheless, it is important that the process remains professional and the acquisition price is assessed objectively. Nobody wants family disputes because of a lack of clear agreements or expectations. The involvement of a consultant is the solution. A consultant can examine the value of the company and the acquisition process independently and critically. This will lead to the best deal for all parties.

Taking over the company as an employee-manager

Is there a lack of succession in the current owner’s family? Or do you have ambitions as a manager to take over the company from your current employer? Then a management buy-out (MBO) could be the ideal solution. For the existing owner, this often gives more clarity about the future of the company. Moreover, the buyer already has extensive knowledge of the company. As the acquisition candidate often has limited capital of their own, an external financier is often needed for the corporate financing. During the MBO process, Taurus will find the right financier for the buyer.

Grow your current business

Of course, major corporations such as Google and Apple are well known for this; taking over a competitor. The objective is, for example, to gain market share, to acquire more expertise or to expand the product range in an innovative way. These types of acquisitions are highly strategic in nature. For the seller, such a process can also result in considerable strategic rewards.

A flying start as an entrepreneur

As an entrepreneur starting out, you can choose to take over an existing company. This is also called a management buy-in. Research shows that taking over an existing company offers greater chances of success than starting a new business. With an existing customer base, income, knowledge and expertise, and accumulated brand awareness, you can make a flying start.

An acquisition as a smart investment

Whereas a business takeover within the family is often more emotional, a takeover as an investment can be a purely pragmatic affair. The takeover can be seen purely as an investment on which a good return can be achieved on a later sale. Taurus can introduce you to specific acquisition candidates and/or private equity parties with a focus on your sector.

Support on acquisitions

The success of an acquisition more often than not depends on the appropriate support. As an acquisition specialist, Taurus offers companies the opportunity to test their principles and discuss their expectations with experienced advisors. Please feel free to contact us. We would be delighted to discuss your options with you.

Questions?

I’d be happy to help you. Please feel free to contact me.

Mark Eenink
Director
[email protected]
+31570-660890
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