Buying into the future
Your client has built up a successful business and is ready to
retire or step down. The economic climate may have delayed their
plans, but they’re now keen to assess their options.
Most businesses will face succession issues and it’s a
particularly significant issue for many Welsh
Government figures indicate that on average a third of UK
businesses will change ownership in any ten-year period. Added to
this, only one in eight family businesses survive to a third
generation of ownership by the same family.
Finance Wales is currently seeing an increasing number of
applications to fund management buy-outs (MBOs) of Welsh
Succession - where preparation meets opportunity
Without a clear succession strategy, selling a business can be
difficult. The business could be undervalued or even face
While trade sales are popular, many owners overlook MBOs. Owners
and potential buy-out teams can often be put off by a number of
The current management team are potential new owners, but your
clients may believe:
- They’re not interested in
purchasing the business.
- They’re not capable of
- They could not secure the
finance they need.
In many cases, the current management team may even be unaware
of the owners’ intentions to sell the business until it’s too late.
They may have some excellent ideas to develop and grow the
Smooth the transition
Early action and some advanced planning can help overcome such
misconceptions, giving the owner time to understand the management
team’s plans and the buy-out team time to arrange the funding.
Finance Wales has a track record of backing SMEs. We encourage
owners or managers to talk to us and use our experience and
expertise to help avoid potential pitfalls.
Valuations need to be realistic and the current economic climate
has undoubtedly had an impact.
Trade offers may look attractive initially, but can change
before the deal is finalised, while an MBO can potentially offer
greater certainty and ultimately a better return.
Three steps to succession
- Create a robust, formal succession plan – work with your
advisers to cover all angles.
- Is there an obvious buyer - would any existing senior managers
like to buy the business?
- For the buy-out team, Finance Wales has the funds and expertise
to structure the right funding package.
Contact us to find out how we can
structure the right investment for your client.