Another Exit Planning Option: Sell To Management

Internal Management Buyout: Another Exit Planning Option: Sell to Management The one exit planning strategy that most often gets overlooked is an internal management buyout but it’s an approach that has several advantages that owners should seriously consider. This post is a very short explanation of 1) how an internal management buyout works, 2) who an internal management buyout works best for, 3) benefits and 4) initial planning steps for those considering it. How an Internal Management Buyout works  In an internal management buyout the company borrows capital typically from bank or non-bank lenders that is then paid to the […]

Financing Challenges: How We Helped a Client Buy His Division From The Owner

Management Buyout Financing Challenges:  How Lantern Capital Advisors helped a client buy his division from the owner. Situation:  A divisional manager wanted to buy his division from the owner who was having financing challenges with the bank. How Lantern Capital Advisors helped execute the management buyout: Lantern helped the manager negotiate the purchase price and terms of the management buyout and secure $7 million to finance it (management buyout financing).  As part of the transaction, this division was spun out into a separate entity.  The manager invested $200,000 and received a 25% ownership stake in the new Company.   If the […]

Owner Exit Strategies

Owners of businesses typically dream of going public or performing an IPO, even though less than 1% of businesses ever achieve this.  However, for the remaining 99% of businesses out there, there are multiple viable options that owners should consider and evaluate when determining their business exit strategy.   Ideally, owners should plan for their owner liquidity event at least five years in advance of their “target date”.  However, sometimes an opportunity appears unexpectedly, and Lantern is called to rapidly evaluate the opportunity and the assist our clients in negotiating next steps.   Some strategies and alternatives that Lantern Capital Advisors has helped […]

When Is The Right Time To Sell Your Business?

One of my favorite shows is “The Office”, I’ll leave the humor out of this post, but the show only exists because the original creators took a chance at producing “something new”. Does anyone even care or know what they did before? What made Simon Cowell so famous in the United States was not producing Teletubbies, but telling contestants the truth on the hit show, American Idol. He’s onto something new now, and we’ll probably all take some time to watch. Business is picking up. Things are looking good. Your sales team has really delivered. But you wonder, is now […]

Exit Strategies Selling Your Company To Management

Exit Strategies For business owners, selling the company to management can be overlooked as a viable owner exit strategy. However, in many cases selling the company to management can be more personally and financially rewarding than selling to another company or private equity firm. The advantages of selling to management can include a higher company valuation, increased motivation and accountability for management, and the opportunity for the (selling) owner to stay involved with the business on their own terms.  Our white paper titled “Creative Management Buyout Strategies” discusses these advantages and financing considerations for selling a company to management via a […]

Message To Management: Don’t Wait!

Last week I got a call from a CEO of small software company. His parent was in the process of selling his company. The process of selling the business was taking longer than expected and the price was below the range the seller really wanted. He called to ask me if he thought he could lead a management buyout. After talking to him and reviewing the numbers, I told him – yes. Two days later he had a meeting with the parent and they had just accepted an offer from another buyer, and was starting due diligence. The morale of […]

Weekly What If: What If Owners Take Liquidity Now?

What If Owners Took Liquidity Now? A profitable software company decided to sell but initial valuations were below their expected value and they wanted to be patient and wait for potentially higher offers. Management was confident that business would be more valuable with each passing month, so an interesting question was then raised. .. What if the owners took liquidity now? The fall of 2010 was not exactly a robust business environment and changes in political administrations likely meant the repeal of the capital gains tax rates. Worried that that would only go up and interested to fund a ‘special […]

Weekly What If: Buy Out Business Partner

Exit Strategies What if we buyout our business partner?  For some companies, their biggest roadblock to growth isn’t a lack of ideas, motivation or initiative. It is a business partner that has other priorities.  For companies with significant growth potential, this challenge arises frequently. One owner wants to grow; the other wants to sell.  One owner sees potential and the other sees risk. Sometimes this comes from different perspectives, stages of life or generations like in family businesses (the younger generation wants to build wealth while wants to protect it).  Owners caught in this position can go through years of […]

Selling Your Company To Management

Business owners often overlook selling their company to management as a possible exit strategy. But for solid companies with good cash flows, selling your company to management may yield a higher financial value for the owner and a much brighter future for the business, management, and the seller. Our latest white paper titled, “Sell Your Company To Management: How Selling Your Company To Management Can Be A Smart Exit Strategy”, was recently published on The white paper discusses the benefits of the strategy of selling the company to management, and illustrates it with an example of a company that […]

Partner Buyout: An Opportunistic Way To Build More Equity Value

Partner Buyout: An Opportunistic Way to Build More Equity Value.  Management Buyout and Leveraged Buyouts financing processes can be orchestrated in the same way in order to help individuals buyout a partner or majority owner of a business.  Partner buyouts can be financed on an all debt basis because the partner already has some equity in the business and this equity can be leveraged as the security in the business. Even during this sluggish economy, some of our clients positioned themselves to build much greater business and equity value by buying out other owners or buying out partners.  While some of these opportunities came about because owners […]