A: This is probably the opportunity of your working lifetime. On top of your salary, a buyout gives you the chance to make a substantial capital gain on an equity stake. As long as you are reasonably optimistic about your company’s prospects, go for it.
If you have never been involved in a big deal, be prepared to learn a lot in a short time. You will be surrounded by bankers, accountants and, particularly, lawyers who have done this many times before. The process can be frustrating – be patient and expect some surprises.
A buyout involves several transactions. You may think it is simply the purchase of your business from the owner or holding company, but there are several deals to be done with people who you think are on your side. The bank will negotiate new facilities, and you may need a mortgage to finance your investment. Your most important deal is with the venture capitalists. You will probably only have to put up a modest amount (the venture capitalists want your expertise, not your money). Try to get a significant equity share on terms that are not too draconian. Every extra percentage could one day be worth a lot of money.
You will need to produce a business plan – be optimistic. The figures will be the subject of sensitivity analysis – bankers don’t like taking risks. Your plan must be robust to get approval.
Don’t be totally distracted by the deal. Through all the excitement you still have to run the business. The MBO gives you a stake, but you must substantially increase profits to make your fortune.