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Management Buyouts Good Option for Exit Planning
Management buyouts (MBOs) could be the answer for business owners who want to exit their company says Halifax accountants, Lambert Roper & Horsfield Limited.
In recent months the firm, which is also a representative of The Corporate Finance Network in West Yorkshire, has helped several local companies through the buyout process.
LRH have helped owner-managers get the best deal for them and has given them the satisfaction of knowing their years of hard work have not gone to waste, and that they can look forward to a financially stable retirement.
A buy-out can occur where a parent company is selling a part of their business it does not see as central to its future, or where the owner wants to retire. A group of managers will put in some of their own personal money in return for an equity interest (a stake) in the business they work for.
“In the current economic climate a MBO is usually the easiest way for business owners to manage their succession planning, allowing the owner control over their exit from the business,” said David Roper, director at Lambert Roper & Horsfield.
“Although exit planning is a natural part of the business lifecycle, many business owners fail to plan adequately for the day they want to stop working. A MBO can be the easiest way of exiting the business if they do not have family members willing to take on the company.”
But there are some pitfalls to avoid if you want to make a successful sale. You should plan your exit strategy carefully, as it may take six months to a year to complete. Avoid unrealistic valuations of your business by appointing a professional team of advisors, including a tax accountant, a corporate finance advisor and a specialist corporate lawyer.
David adds: “The main advice is to thoroughly prepare your business for sale and ensure all your accounting and legal entity records are up to date to maintain the most competitive bidding position.”
For more information, contact Lambert Roper & Horsfield Ltd on 01422 360788.