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Frequently, when a large corporate entity is looking to
divest of a subsidiary or division, it is the existing
management team that is the most suitable buyer. Although
management teams in this situation commonly find themselves
with the knowledge necessary to successfully run the
business as a standalone entity, they typically lack the
necessary financial resources to execute this type of
transaction on their own. We can be a valuable
partner with management in these situations for a number of
reasons:
- Merit is able to provide equity along with its
subordinated debt. This allows the management team to
work with just one junior capital provider.
- We do not require control or oversight of the
day-to-day operations of the company, but instead
prefers to work as board level advisors to help grow
businesses. As a result, management will retain
operating control of the company.
- Partnering with Merit enables the management buyers
to achieve a more meaningful ownership position in
relation to their cash investment and a greater say in
the future of the company than would be possible
relative to partnering with a pure equity fund.
- Merit’s experienced team of investment professionals provides
additional manpower and assistance in the labor
intensive due diligence and closing processes which can
be crucial in the short time-frames often dictated by
these situations.
Merit has provided financing to support a
number of management teams in acquiring businesses sold via
corporate divestitures. For further detail on a specific
example, click on the case study below:
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