Questions to ask your proposed adviser before signing up

You will undoubtedly ask about the amount and structure of the proposed adviser’s fees before signing up to use their services.

Here are a few more questions which you should ask, which will give you a much better feel for the proposed adviser’s approach to your management buyout and their track record.

Question 1

How many transactions are you working on?

Ask how many transactions is your firm working on?

And how many transactions are you (the person who will lead the transaction) working on?

The answers will indicate the level of personal service and attention you will receive from your appointed adviser and how much of their time will be focused on finding the best funders for your buyout, working with the funders to obtain formal offers of finance and finding solutions to any commercial or financial issues which crop up prior to completion.

Our approach recognises that all businesses are different with their own complexities and issues which need to be taken into account. This warrants a tailored approach adapted for each client rather than a “conveyor belt” standard process. Our experienced and skilled staff act on only a few transactions at a time. Hundreds of hours of professional time is devoted to each assignment.

Question 2

What is your success rate?

Ask how many buyout teams the adviser has acted for over the last 3 years and how many of those buyouts have now completed.

Our track record speaks for itself: we have completed virtually every buyout we have acted on.

Our success rate is achieved partly because we will only accept an appointment to act when we believe that the buyout can be funded.

Question 3

Who will be involved on this assignment?

Ask for the names, job titles, qualifications and experience of everyone who will be involved in the assignment. You need to understand what each of these people will be responsible for. Who will do what?

You are unlikely to want your assignment to be used as a training exercise for new staff or junior staff.

If your proposed adviser is an accountancy practice, find out whether all the staff who are going to be involved on your buyout work full-time in corporate finance. You may find that some of the staff usually work in the accounts production department or audit department and only help out on deals when the corporate finance department is busy.

Every member of our team is professionally qualified and individually has many years’ experience advising on management buyouts. We do not employ junior or unqualified staff. Every assignment is staffed solely by highly qualified and experienced individuals throughout.

Question 4

How long have you been operating?

Ensure that the adviser you appoint has a successful track record. Ask about how long they have been trading and how many management buyouts they have completed.

Question 5

What is the typical size of the adviser’s clients?

Ask about the adviser’s typical size of clients.

Find out how many buyouts they have completed during the last 3 years with a turnover similar to your company’s turnover.

Ask how your business fits in terms of size compared to the other buyouts they are currently acting on. Is it one of the largest or one of the smallest?

It is important to get an accurate feel for the size and complexity of their typical assignments, so as to judge whether they are likely to have the skills necessary to successfully complete your company sale.

Question 6

What is your role after the funding has been offered?

Ask the adviser about the level of involvement they will have after funding has been offered and a funder chosen. Ask for a detailed explanation of what they will do at this stage.

Some advisers see their role as largely completed once the funding has been offered. However there is lot of work to be done to after this stage to complete the buyout. We act as lead deal advisers at this stage, responsible for project management. We will work closely with your lawyers. We will act as an interface with the vendors and their advisers in dealing with all the detail that needs to be negotiated in order to complete the transaction. We will negotiate and seek to resolve issues arising out of the due diligence and legal process.

Question 7

Can you give me a list of references?

Ask for a list of former clients and of professionals they have worked with on transactions who would be happy to speak to you about the adviser’s service.

Talking to professionals they have worked with as well as to clients is important. Clients will usually only go through a transaction once in their lifetime, but other professionals (particularly lawyers) will have worked with many different corporate finance advisers and will therefore have a good feel for where the individual who will lead your deal falls on the scale between poor to excellent. Try and avoid taking written references – you will find out much more by phoning and discussing.