We can turn you from a Manager into an Owner
Equity Ventures is a venture capital and corporate finance firm.
We manage some venture capital funds exclusively on our own; we co-invest with other venture capitalists managing funds for investment of up to £10 million; and we arrange management buyouts for deals of all sizes where our past experience in doing deals is helpful for management teams. Whether we invest, co-invest or just arrange depends on the circumstances of each transaction.
We also work as advisers with managers in existing private equity transactions who are looking for an exit or secondary buyout opportunity. And we work with the management of companies who are looking to make acquisitions of other companies or sell all or part of their company.
We are a small team so you always work with the same people.
What is a business worth to a venture capital firm?
Venture capitalists use detailed spreadsheet models in valuing and structuring MBOs. Our model distills the essence of these and it is a useful tool which has been used on many MBOs and has been purchased by several institutions including the Bank of England.
Our model also shows how the future exit value of the MBO company will be shared between management and the venture capitalists: click here to try it MBO buyout business valuation
Industrial sectors we focus on
We are interested in most sectors. However, profitable though they may be, we are excluded from transactions involving armaments and gambling. Apart from these exceptions, if it is legal, we will look at it.
Currently we see an increasing appetite in the ICT sector particualrly in respect to cyber security, data centres and their owners and suppliers.
How a small MBO team buys a large company
The way that a management team can fund and finance an MBO is now well established. The existing business is known as the "Target" and the MBO company is referred to as "Newco". Newco is funded by money from the management team, venture capitalists, and banks. Because the venture capitalists invest in shares as well as loans or preference shares they get a lower precentage of the economic ownership of the company than the MBO team for each pound invested. By varying the investment proportions management can have a significant financial stake in a large company for relatively little money - provided the company increases in value after the deal is done.
What you should do next to start the MBO process
The next step is to contact us by phone or email. You can approach us with just an idea for a transaction, an executive summary, or a full business plan.
If we think you have a potentially backable proposition we will arrange to meet you. This can be at your premises or elsewhere; and we are happy to meet outside normal office hours if that is more convenient or you are worried about confidentiality issues.
An MBO venture capital firm with experience
We prefer to invest alongside management and on similar terms to them. This helps align our interests with yours. We won't encourage management teams to produce profit forecasts that we don't believe in or to pay more for a business than we think sensible. This approach comes from our experienced background in banking, consultancy as well as being venture capitalists for over 20 years.
MBO fees and costs
Most fees, including ours, are contingent upon a transaction happening. This means you can start on the management buyout process without worrying about incurring costs on a transaction that doesn't happen.
Is an MBO of your company possible?
An MBO does require a seller, willing or unwilling. A willing seller is usually the retirement sale of a privately owned business or part of a corporate group being sold. An unwilling seller is a company in distress usually because of losses or debts. Even a willing seller will only sell if the price is acceptable to them.
At Equity Ventures we can help you help you establish at an early stage if it is feasible to do an MBO of your company.
We have experience of making the first approaches and assessment of buyout and acquisition possibilities and we can discuss and agree these with you. But you won't know what can be done unless you start the process - with a phone call to us.