MBO

MBO Research

Public companies

As with all potential deals, the incumbent management team are in the ringside seats if a sale is in prospect. There has been a marked increase in the number of P2P deals completed in recent years as plcs have sought to refocus their businesses, or shareholders have agitated for an exit, when no trade buyer is interested. The next chapter covers some of the issues you will come across in attempting to do a deal in this sector.  Describes MBOs at Taunton Cider, Dennis-Eagle and Cloverleaf Group, all of which were bought from public companies.

Research

 “Time spent on reconnaissance is rarely wasted in the field” is an old military

saying, but it applies equally to commercial life.  Before the advent of the internet, research was difficult and was dominated by professional research companies. Nowadays it is possible for anyone who knows how to use a computer to build a detailed insight into any commercial organisation quickly and cost effectively.

Personal networks

These are still as effective as ever at providing information and identifying opportunities. A combination of phone calls and meetings with employees, advisors, suppliers and customers provide a valuable insight.

Trade associations, publications and exhibitions

These are another invaluable source. A combination of desk research and attending industry events can be very informative. Invariably there will be a number of industry-specific websites available.

Financial information

There are many sources which cover public and private companies:

• Financial websites: for example Motley Fool, FT and MoneyAM.

• companies’ own websites

• Companies House: this provides access to a company’s financial history as well as information on directors, shareholders and financial performance; and

• search engines: Google, Yahoo and others are extremely effective as

Research tools. Perhaps too much so – sometimes it is like trying to fill

a cup from the Niagara Falls!

Marketing sources

In certain companies advertising and promotions are vital ingredients to the business, and there are many sources of information available which can build a picture.  A company’s record in advertising (level of expenditure and consistency of creative executions) is always revealing. Good brands tend to be consistentlysupported with strong creative executions and campaigns. Weaker, struggling brands leave tell-tale signs of erratic investment with meandering creative executions. The integration – or lack of it – of advertising and promotional campaigns is also revealing. There should be a strong motivating message to the consumer which is evident across the marketing mix. Struggling brands will project a more confused picture.

Field visits

Trade distribution, display, appearance, promotion and pricing build a revealing picture of target and competitive brands quite quickly.

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