Support for a transaction
One of the best types of deal a private buyer could undertake is to effect a buyout of less than 100% of the company’s share capital. In this way, a funder will likely be more interested and also, there are gains to be made from existing shareholders retaining equity post completion. Also, by combining forces with other like-minded individuals, whether an existing team member from the company or an external investor/buyer with complementary skills to your own, you will be creating a situation with a higher probability of success.
There are a number of key roles within a private company (and more specifically, an SME business with turnover under £5m). Essentially, there are three main areas to cover – (i) managing day to day operations; (ii) managing sales and marketing and (iii) managing the finances. If the business is providing a technical product or service, it is likely that you will also need someone to oversee that side too. The respective roles might be titled as follows:
- Managing Director / General Manager/Operations Director
- Finance Director/Manager
- Sales Director/Sales and Marketing Director
- Technical/Commercial/Engineering Director
What are your own skill sets ?
Depending on what your own skill sets are, you will need to consider who else is required to join and complete your team. Is there someone in the business who wishes to join in the transaction ? If so, do they already own shares in the business ? If they do, this is already a much easier discussion. If they are ambitious but don’t yet own any equity, they will need to consider contributing some private capital to the deal. The amount of capital doesn’t necessarily need to be at the same level as your own, but it needs to be an amount which the person concerned will not be comfortable losing should things go wrong. Therefore, this is likely to be anything over £10,000 but probably more likely in the region of £40,000-£100,000 subject to the size of their equity stake.
Team members from outside the organisation
For buyers coming from outside the organisation, if you already know of an individual who wishes to invest alongside you, that is a good start. Perhaps you’ve worked with them in the past or; maybe they have sold a business and wish to re-invest some of their capital or; they might not wish to be involved full time but they are looking to contribute to a business where they can assist with growth and build their capital base. Either way, you will need to find a team who have complementary skills and a common goal.
Team members without capital to invest
It might be the case that there is an individual with proven skills and experience of working in the business and they would like to have an equity stake but they haven’t got the capital to invest to become a shareholder at the date of completion. For any such individual, you could consider giving them a share option scheme or a “bonus scheme” which will recognise their contribution to the ongoing development of the company and would crystallise in the event of a future sale of the business.
How can valius help you to build your buyout team ?
The Valius BuyerPremium membership level can help you to get in contact with other buyers in a similar position to you and thereafter, help you to join forces and combine to make a powerful team. In doing so, you will give yourself a greater chance of successfully completing a transaction.