In a management buyout, Management and Founders Court purchase a business. Founders Court provides equity capital. Institutional and private lenders provide financing.
The business stays intact; its identity is preserved, and Management operates the newly created company with an entrepreneurial attitude.
The inclusion and enthusiastic participation of Management is essential to achieving success.
The Small Market Premise
Founders Court believes that the greatest probability of success in management buyouts occurs in companies with sales up to one hundred twenty-five million.
These companies are more nimble than their larger competitors. They can respond quickly to market opportunities and can take advantage of niches that may be too small for larger companies. And they have substantially higher earnings and growth potential.
Small company management buyout opportunities occur when large companies decide to divest healthy business units or when private owners decide to sell but want to preserve the identity and independence of their business.
Collaboration
We characterize collaboration as a fusion of interests and goals.
Collaboration increases the probability of achieving strategic and operating objectives and financial goals.
Each stakeholder group contributes to the collaboration effort in the classic concept of teambuilding.
Investment Strategy and Acquisition Criteria
Founders Court provides equity capital and arranges financing for acquisitions of healthy and prosperous private and public sector businesses in the United States.
Essential acquisition criteria include a:
Highly motivated Management Team that will participate in both management and equity ownership.
Record of earnings and positive cash flow coupled with sound overall financial condition and clearly identifiable growth potential.
Well-defined market niche.
Reasonable price in relation to cash flow and assets.
A Management Buyout Transaction
Management and Founders Court acquire and maintain a controlling interest in a business. The plan is to build the business until the mutually created business plan goals and objectives are achieved.
When goals and objectives are achieved, the business will have established a respectable operating record and have repaid a majority of its debt, thereby increasing equity value substantially. The business can be remarketed at a multiple and price that maximizes Return on Investment.
In all Founders Court investments, members of the Management Team are encouraged to acquire as much equity as they can reasonable afford, as a demonstration of commitment, as an incentive and to align interests to increase equity value. Additional incentive programs may also be created for all or specific groups of employees.
Managing an Investment
We expect and encourage integrity, diligence and entrepreneurship from everyone: the Management Team, directors, financial providers and ourselves.
We measure performance against written plans and forecasts jointly developed with the Management Team and endorsed by the Board of Directors. These plans must, at a minimum, lead to realization of our financial objectives.
We help when we should or are asked. When we don't need to, we get out of the way.
In short, we try to create the best possible situation for the Management Team to do what it does best, and we limit our role to what we do best. That role includes contributing directly to mission, strategy, policy decisions and monitoring operations through reporting and regular meetings with Management.
When the strategic and operating goals have been achieved and the market is favorable, we liquidate our investment through the least disruptive medium taking into consideration our responsibilities to our Investors, Management and the company.