As lockdown restrictions ease, many business owners looking forward to retirement are considering their future options with management buy-outs (MBOs) proving a popular way forward.
Business valuations can be difficult during volatile times but surprisingly these have remained largely consistent in many sectors with the Covid-19 pandemic having had limited impact so far. Indeed, many business owners are seeing now as a good time to sell and MBO transactions have been progressing well during and post the pandemic.
Succession planning takes time and although a succession deal is typically a lengthy process, selling to the management team is a popular option as it can be less disruptive than a traditional sale. It can also provide much needed consistency in terms of productivity and customer service; a welcome factor after months of uncertainty.
Stephen Galvin, senior investment executive at Development Bank of Wales, explained: “Despite Covid-19, we’re continuing to see strong demand for management succession funding and equity finance in particular is proving a popular option for management teams looking for a supportive, long-term investor.
“Business owners are thinking carefully about their exit strategies and preparing for the future. We’re working closely with many management teams to offer the finance that they need to buy-out founding directors.”
“In fact we are here to help management teams with robust business plans to secure funding and since the lockdown professional advisers have embraced digital technology for due diligence purposes so that transactions can complete smoothly as usual.”
Development Bank of Wales is working with a range of business owners and management teams on succession deals as they adjust to the new normal and start the fight back from Covid-19. Nolan uPVC completed its management buy-out shortly after the UK went into lockdown.
Established in 1989 by Nolan Nicholas, Nolan uPVC is an award winning retailer of UPVC and aluminium doors, windows and conservatories. Operating across Wales and the South West, the management team were able to buy the business thanks to a mix of loan and equity funding provided by Development Bank of Wales.
Mr Galvin added: “Nolan has developed an incredibly successful and solid business that is trusted and valued by customers and colleagues alike. His passion and care is instilled in the management team who have done a great job of building the business to where it is today.
“Funding for this type of MBO is exactly the reason why the Wales Management Succession Fund was established; providing aspiring new owners with the right type of finance they need to buy indigenous businesses and drive them on to even greater success.
“Our doors are very much open for business and we encourage anyone considering succession planning and looking for business funding to make contact with our friendly teams.”