Corporate Finance FAQs

Here you will find answers to some of the typical corporate finance questions.

  • VIMBO

    One type of sale that we are seeing now more than ever is the so called VIMBO. In this form of management buy-out, the sellers of the business essentially sell to existing management over a period of time (which could be up to 7 or 8 years or longer). The sellers will take some of the consideration up front but leave the rest to be paid over time. The company essentially self-funds the sale over this period.

    Third party debt funding may or may not be a feature of a VIMBO but the buyers will usually be required to put down some of their own cash. The sellers meanwhile will retain an interest (ordinary shares and preference shares/loan note instrument) which allows them to exercise a level of control in the business in order to protect their deferred consideration.

    Some of the advantages of a VIMBO for sellers are:

    • The chance to realise more than a trade buyer might pay for the business.
    • The lack of substantial warranties and indemnity.
    • The ability to continue to influence the business and ensure an effective handover of control to management.
    • The ability to benefit from the available tax reliefs

    Not all businesses will suit this model though. In order to make a successful VIMBO there needs to be (as a minimum):

    • Suitable management in place to take over the business.
    • A good level of trust between the sellers and the managers buying the business.
    • A good level of cash (and projected profit) within the business to sustain and fund the sale over the projected period.

    Where these circumstances align, a VIMBO can be a very convenient way for business owners to sell their business in the absence of cash rich trade purchasers knocking down their door.

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