TaxAssist

Challenges

During the negotiation process, many of the company’s franchisees, and other third-party branded trading partners and investors, offered investment funding. It was going to take a unique funding model to provide the founder’s desired exit terms while retaining the independence of the franchisor.

Creating this model presented a number of significant challenges:

• The vendor had very firm expectations, which needed to be managed.
• The firm’s management had slightly conflicting circumstances, due to historic incentivisation packages.
• Numerous investors needed periodic updates, and enough information in the appropriate form to enable them to take advice before signing up to the deal.
• There was no known existing model, so everything had to be done carefully and meticulously.

How our services have helped

As with many transactions involving complex funding negotiations, the buy-out went through a number of stages over a prolonged period before the final deal was reached. However, this process was vital in helping shape the eventual deal, with the investor group forming a franchisee-assisted management buy-out (FAMBO).

As part of the process, we carried out a detailed financial modelling exercise, examining the funding requirements and affordability of the anticipated deal structure. We also created a business plan for the new investors and bank to consider.

The agreed funding structure consisted of significant third-party investment from more than half of the franchisees and their staff, together with other trading partners of the company, plus a multi-million loan agreed with HSBC. External financial due diligence was undertaken on behalf of the bank, to examine the suitability of the proposals and financial model.

Following a round of meetings with potential investors and franchisees, we helped TaxAssist’s management devise a suitable corporate structure.

The FAMBO was successfully completed in August 2014. The business is now 32% owned by franchisees, 53% by the senior management team and 15% by long-standing external business partners.