Family Exit and Succession


We were introduced to a profitable and growing family business by the company’s bankers who had been involved with the company since inception more than 20 years ago.


The owner had planned to phase out working a few years previously, but as a result of the banking crisis this had been put on hold. Despite being profitable and having good growth prospects, the business was not particularly attractive to trade buyers due to the reliance on the Managing Director and major shareholder. Any exit by trade sale was expected to involve a commitment by the MD to stay employed for at least two years, with most of the exit proceeds linked to future profitability. The MD was concerned that a trade sale would mean no longer being in control and making decisions, instead being told what to do in many respects. This was as important to the owner as the proceeds of sale.


We started working with the company to establish whether there were alternatives to trade sale and to ensure that there was a new management team in place that could transition to eventually take management control. The son and daughter were both active in the business, but lacked experience as were the other two key members of the team.

We were asked to perform an initial project to review:

  • The current status of the business covering the business background, products and services, market and competitors, key differentiators and risks, management and shareholders, and financial information (see below) – in effect a mini Business Plan / Information Memorandum. We also looked at the company infrastructure, systems, processes, skills, culture, as well as the aims and ambitions of the business and the succession team.
  • Review of historic financial information and a high level forecast for the next five years. The company had never prepared a budget and were unsophisticated in their financial management. Significant changes and improvements were introduced.
  • We reviewed these documents internally with the owner and discussed with the bank, and created a document outlining a way forward for the owner and the business. It was agreed that trade sale was not appropriate or what the owner wanted, and that a VIMBO (Vendor Inspired Management Buy Out) could be achieved.
  • We put in place a coaching/leadership programme with one of our key partners, based on a 12-month programme.
  • We also worked with the company’s accountants to restructure the shareholdings to take advantage of Entrepreneur’s Relief and other tax benefits.

We were able to establish that the company was sufficiently cash generative and profitable to allow a phased exit for the owner and that the bank was prepared to provide a term loan to allow the owner to extract cash on completion and over the next few years.

This project took more than 12 months and ultimately almost 18 months by the time the transaction was completed.


Key outcomes of the role included:

  • The owner received an initial exit payment and has additional payments over the next five years, as well as owning a stake in Newco which acquired the existing company.
  • The son and daughter are now majority shareholders and the rest of the management team also have an equity stake.
  • The MD and former owner is now reinvigorated and plans to continue at the helm for the next two years at which stage his son will take over.
  • The bank has retained a longstanding client and increased borrowing to a business it knows well, in a low geared transaction.

Craig Alexander Rattray was retained on an ongoing basis to provide part-time Finance Director support and to assist in other strategic and commercial matters. This is one of a number of these types of projects that we are currently working on as many “baby boomers” seek to realise proceeds from their business in a controlled and low risk manner.