Management buy outs
Companies sometimes go through periods of change which can be positive for the business while appearing risky to an outside interest. One such example is a Management Buy Out.
One Bluestone customer, a successful, family run precision engineering company established in 1969, reached a point where the family members wished to withdraw their interest from the company. After raising the funds to buy the company by personal means and by refinancing assets within the production plant, the existing management team bought the company from the family. These new owners wished to upgrade their office IT systems to bring them in line with the high standard of their engineering abilities.
In many cases such as this, an underwriting team take the view that the company has been reborn so, until it can provide a proven trading history since the Management Buy Out, it can therefore be difficult to raise asset finance, even with a guarantee from the directors. Another complication, in this instance, was that the company had changed registration numbers while retaining the original company name.
Bluestone Leasing spoke at length with this customer and found out that the existing system was not supported, had no reliable method for the backing up of information and frequently crashed. This wasted many man hours with downtime and the need to re-input information on a regular basis. It seemed important to get the upgrade of the IT to allow the new company to feel confident in their system which would be secure, provide a more efficient accounting department and ensure that all contract and customer information was stored safely.
By using the company's previously excellent trading history, the fact that the new directors had purchased the customer base, present order list, the existing name and well known trading style along with the directors' experience of five years within the firm, Bluestone Leasing arranged the finance for the project and did not need to request guarantees to do so. This customer was extremely pleased with this result and the office is now a much more pleasant and productive place to work.
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