Management Buy-Out

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Case Study: Management Buy-out


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New Owners for Trajan Scientific Medical

Background

With offices in Melbourne, Tokyo, London and US, SGE was a large manufacturer of advanced scientific instruments.

As a family-run business for many years, SGE’s management team had recently made significant structural changes and now wanted to take the business in a different direction to its owners.

Both parties were therefore interested in pursuing the possibility of a management buy-out.

Approach

The SGE management team approached Kennedy Needham to structure, negotiate and oversee a management buy-out on their behalf. Given the strong credibility and vision of the Managing Director and his team, Kennedy Needham recognised the potential for success.

Kennedy Needham worked with the SGE management team to design a creative finance solution giving financiers security over individual asset classes.

Outcome

Using a cocktail of financial support - including property finance, inventory finance and debtor finance - the SGE management team successfully bought out a significant portion of the business. The buy-out involved over 300 staff and revenues of US$30 million.
The newly established business, Trajan Scientific & Medical, is now going from strength to strength under CEO, Stephen Tomisich.

The transaction required Kennedy Needham to negotiate with and obtain finance from different parties and manage the transaction to completion. Without their guidance and sourcing of appropriate financiers, the buy-out would have been far more difficult,” said Mr Tomisich.

Key learnings

  • A management team must have credibility and a detailed strategic plan for a buy-out to succeed. In this instance, Kennedy Needham could see that the four SGE directors were all on top of their game with widespread internal support.
  • With the right advice and contacts, a management buy-out team can maximise its equity position using as much debt as possible to settle the transaction.