Management Buyout (MBO) for Wentin Fasteners Limited

Sometimes a management buy-out (MBO) is driven by a management team’s desire to take ownership; other times, it’s initiated by the owners themselves as a means to ensure business continuity while retiring. The latter was the case for the owners of Wentin Fasteners Limited, based in Yeovil. 

When the owners decided to retire, they approached Robert Gillard, Manager, with a proposal for him to purchase the company. Robert had been with the company for ten years, managing it for the last seven. 

While the opportunity was exciting, Robert quickly realised that navigating deal structures and financing was outside his usual experience. Specialist advice would be essential.

Embarking on an MBO journey presents several hurdles for a first-time buyer. Robert encountered the following key challenges: 

• First-time buyer: Robert had extensive operational experience, but limited exposure to corporate finance, taxation, and deal structuring
• Complex deal requirements: The transaction required careful planning around financing, structuring, and compliance
• Stakeholder alignment: The sellers’ original plan needed adjustments to make the deal feasible and tax-efficient for both parties 

Recognising the need for professional guidance, Robert partnered with Old Mill’s Corporate Finance team. They delivered a tailored solution to meet the unique requirements of this MBO: 

Holding company structure: Old Mill recommended creating a new holding company to facilitate the acquisition, allowing for: 

• Easier access to financing, as banks prefer lending to companies rather than individuals
• Tax efficiency, with loan repayments taxed at the 19% corporate rate instead of higher personal Income Tax rates

Stakeholder collaboration: Old Mill engaged with both the buyer and the sellers to explain and align on the revised structure.

Streamlined due diligence: Since Robert knew the operational aspects of Wentin well, due diligence efforts focused specifically on financial and tax compliance risks, minimising disruption and expense.

Through strong collaboration and careful planning, the MBO was successfully completed. Key outcomes included: 

• Efficient process: Heads of Terms were signed just before Christmas, and the transaction was successfully completed by the end of February
• Smooth transition: Minimal disruption occurred thanks to Robert’s operational knowledge and the collaborative approach by Old Mill
• Long-term partnership: After the successful MBO, Robert appointed Old Mill as the company’s accountants going forward 

This case study highlights the importance of expert advice for first-time business buyers. It shows how critical the right structuring can be to enable accessible financing and tax efficiency. It also demonstrates that a collaborative approach helps align all parties to the transaction and that strong relationships built during an acquisition can lead to enduring professional partnerships.