White Paper Library:

Management Buyout Strategy

“Creative Management Buyout Strategies”

Download from CFO.com 

August, 2008

Chris Risey - Atlanta


Private equity firms particularly those that focus on buying smaller companies (less than $100 million in value), will often structure the financing of a buyout utilizing limited amounts of their own equity and aggressive debt structures. While such an approach can create spectacular returns for their investors, management and the sellers can often end up feeling shortchanged. Thankfully, owners and managers can use their own creative buyout strategies to create substantially more value for both buyer (management) and seller (owner).

Selling Your Company

“Selling Your Company:  How Selling Your Company To Management Can Be An Alternative Exit Strategy”

Download from CFO.com 

April 2010

Chris Risey - Atlanta


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.  This white paper discusses the benefits of the strategy of selling to management, and illustrates it with an example of a company that successfully completed a leveraged management buyout after proactively pursuing other alternatives.

Buying Out A Business Partner or Business Owner

Management Buyouts and Leveraged Buyouts

Many times in business, one owner wants to buyout another owner,  or one business partner wants to move in a different direction from the other business partner.  An owner may be investigating exit strategies, or is ready to sell their business interests to employees, family, or an outside company.  Lantern Capital Advisors helps business owners, management teams, and minority shareholders execute leveraged and management buyouts that allow the purchaser to realize control of the business while allowing them to create significant value.

Buyout Services and Lantern Capital Advisors

Lantern Capital Advisors works with management teams and owners to evaluate a company’s business and potential for a leveraged buyout.  If it is believed that the future of the business provides a strong potential for success, Lantern Capital Advisors consults with executives and management to draft a letter of intent (proposal) to purchase the Company from the owner. 

Often one of the biggest road blocks to executing a successful buyout is the owner’s belief whether management is a qualified buyer, or if the financing is achievable.  To gain the confidence of management and the owner, Lantern Capital Advisors works with the company to pre-qualify the buyout with multiple potential lenders/investors prior to submitting a final proposal to the owners so that both owner and buyer can feel confident a deal can get done.   Lantern Capital Advisors can also help management and owner identify an independent valuation firm to justify the purchase price both for the potential buyer and seller.

Once an owner accepts the letter of intent, Lantern Capital Advisors will work with management to draft a business plan and financing request to secure the needed capital.  Lantern Capital Advisors will arrange meetings with interested lenders and investors and will assist with the negotiations of all financing proposals. 

The goal is to find financing that optimizes management’s ownership potential and long term objectives, and maximizes the sellers liquidity.

Once the financing is in place, Lantern Capital Advisors works with the owners and management to monitor due diligence and close on the purchase transaction.  Lantern Capital Advisors can also coordinate with legal and accounting professionals to optimize the structure of the new company and purchase. This includes an analysis of a full or partial ESOP structure for the transaction.

How Lantern Capital Advisors is Compensated 

Unlike most investment bankers and advisors, Lantern’s compensation is not based on the amount of financing raised or the overall purchase price of the Company.  While fees under the Lehman Formula or Double Lehman Formula are lucrative, Lantern Capital Advisors believes this compensation structure presents a conflict of interest for our firm and works against the best interests of the management team, and the owner of the company.  Like all of our projects, Lantern Capital Advisors charges an hourly fee for our consulting time and our success rate for delivering financing alternatives surpasses those of investment bankers and brokers.

Sample Calculation of Lehman Formula vs. Lantern Capital Advisors Consulting Model.

Investment Banking Fees Vs. Consulting Fees:  Learn About How We Raise Capital For High Growth Companies

Contact us to discuss your management buyout opportunity on a confidential basis.

Learn More About:

Management Buyouts and Leveraged Buyouts

Non-Sponsored Buyouts and Lantern Capital Advisors


Lantern Capital Advisors consults with executive and management teams to evaluate and execute a company’s business potential for a leveraged management buyout transaction. 


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