Shareholder Buyout
What is it?
- It is a financing agreement whereby management pools resources to acquire all or part of the business they manage. Should the management use company assets as collateral then the shareholder buyout becomes a leveraged shareholder buyout.
- Existing shareholders, excluding the selling shareholder, determine whether to sell the shares of the outgoing shareholder to another party or if the remaining shareholders will purchase the shares to strengthen their ownership stake.
What to expect?
- Shareholder buyouts are used to prevent the unauthorized or unfavorable sale of a company’s stock.
- This type of agreement allows for smooth transition between shareholders, management, and employees.
- Typically, the Management (Buyer) and Exiting Shareholder (Seller) must come to an agreed sale price.
- A valuation of the company or the shareholder’s shares are done to help justify the price set between buyer and the seller.
Who should consider
- Companies who seek to forego an existing relationship or affiliation with a shareholder to alleviate the internal conflict in the business.
- Companies who seek to replace an outgoing shareholder with an incoming third party interested in acquiring the outgoing shareholders shares.
How Can Bayfront Help
Strategy Review
Detailed analysis of the Client and advise on value-adding corporate strategies.
Competitive Benchmarking
Detailed analysis of the Client and benchmark them against Industry standards.
Structuring
Detailed analysis of the Client’s capital structure and advise on the optimal proportion of equity and debt.
Deal Execution Management
Assisting in execution of deal processes, most commonly in the form of capital raising.
Valuation
Helping to navigate through the complexities of transaction, improve transaction execution, and increase the chance of success.
Information Memorandum
For presenting to different target audience such as lenders, new sales relationships, new client relationships.
Governance Review
To determine the specific governance needs of a company and assist in areas which would minimize risks and help achieve business goals.