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 timeframes often dictated by these situations.