26 DOING THE DEAL


Steve Bell, corporate finance director at Pierce Business Advisory and Accountancy Group


Management Buy Outs (MBOs), especially with the funding markets changing, are now under pressure. The equity markets have moved away for the smaller investor, so it’s all driven by debt. High Street banks, for all intents and purposes, aren’t looking at transactions.


You’re now looking at the independent lenders, with double digit levels of interest. It brings a lot of pressure post- transaction. The majority of EOTs see the


vendor deferring consideration over a period of time. It puts them in control and it takes a lot of the financial pressure off the business post-transaction.


The nought per cent tax rate is a key driver. There are also significant benefits for the guys who work on the shop floor, with an annual bonus of up to £3,600 that can be paid out tax free. As an adviser, you’re going through a lot of transactions where the vendors say, ‘I want the business to exist. I want the name to continue.’ You’ve got to forget about that.


As soon as you’ve sold the business, they can do whatever they want with it. If you sell it to a management team and a big offer comes in six months later it’s gone. So, you’ve got more control over the current and the future, to a certain extent.


Tony Garner, managing director of Viva PR


We did our EOT deal in December. We’re 13 employees. The tax benefits were explained by professional advisers and it made sense but it was a small part of the process. The key drivers for me were certainty and clarity.


I’ve founded Viva, built something up over 22 years that I’m proud of and I felt that I could hand it over better intact, keeping that culture that we’ve built up.


It is that legacy thing, it’s got nothing to do with the money. All the financial benefits, yes, they’re great, but I’ll still never be a rich man.


I’m 57 now and the question becomes, what are you going to do in the future? A couple of the senior team had kind of politely been prodding and poking a little bit about, ‘Well, where are we going, boss?’


So as soon as it was laid out to me, it was, ‘wow, this sounds really good.’ I spoke to a couple of companies that had gone down the EOT route and thought, ‘yes, that’s for us’.


There is a sense of ownership, whatever that looks like. We are a very solid crew. I think the EOT will make us even more solid.


terms of the EOT benefits, ultimately, it’s the legacy that it leaves behind.


When Jo Kimber, who was our owner and now our chief executive, made the decision she wanted to reward the colleagues that had helped her get to where the business is now and that was her way of being able to do that.


The other advantage that we have is that we’re a very operational, people- led business. The incentive payment that we’re able to pay each year makes a significant difference.


Victoria Pittman, head of client services at EOT Granby


I come at this as a member of the senior leadership team but also an employee. In


People on the ground are motivated by being part of this team and it is retaining and attracting talent. Every employee gets exactly the same incentives. It’s equally split regardless of job role.


Chris Mayne, managing director of software services firm Forsberg Services


We have just been acquired by a company called Teleplan, a Norwegian company.


I took over as managing director in 2020 and it was very important to ask, ‘What is that exit strategy?’ You always like to know what is the objective.


We talked about a few different options. Then we got to the stage where we were ready to be valued and to look at what was out there.


There were a few conversations about going out to the open market but we didn’t want to do that because of the concerns about breaking down the business.


So, we got to the point of looking at acquisition. We really wanted to find a business that had our same culture, our same values, and we’d been working with Teleplan since 2019.


The business is owned by a family at the top level and they are very focused on their people and on innovation.


We approached them and said, ‘Would you be interested because we think together our products are complementary; our people work well together; we think this would be a really good fit.’


They agreed. They put in an offer, which was accepted. We’ve worked very, very closely through that due diligence process and did the deal just before Christmas.


We had our first anniversary as an EOT in September. Figures have shown we are eight to 12 per cent more productive per employee. We’re seeing an 83 per cent increase in employee motivation and 73 per cent increased job satisfaction.


Jo looked at a number of options and her biggest concern was that whoever was going to take over would break it down and we would be incorporated into somebody else’s business and what would that mean for us? That lasting legacy was really important to her.


We have created a trust board. On that we have an independent chair, not related to the business in any way. We have two board directors and Jo, as ex-owner, is not on that board. We also have an employee representative and they are the spokesperson for the employees.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68