Debt only buy-out maximises return for exiting shareholders and management team

Polestar has completed a Management Buyout (MBO) for Dryad Group, which provided an excellent result for both the vendors (securing a strong valuation) and the management team, allowing them to buy a business into they had already invested much of their time and passion. 

Dryad has a strong reputation for quality and logistical efficiency, supplying high-quality, student-focused arts and crafts’ products, including a comprehensive own-brand range, which provides competitively priced alternatives to the recognised market brands.

With continuity and succession planning in mind, the previous shareholders were looking to secure a transition of ownership to the management team. Polestar Corporate Finance was able to propose a multi-layer debt structure from different funders, to facilitate this.

“With Dryad we recognised the opportunity for both exiting shareholders and management to benefit through an MBO. Using an international working capital facility from Leumi together with a subordinated loan from Caple enabled us to facilitate the buyout without having to resort to more expensive external funders such as private equity.  As a result, management did not suffer from the normal dilution of their equity stake.  At the same time, the long-term profile of the subordinated loan places lower repayment requirements on the business than a smaller traditional bank loan, giving a strong financial foundation from which to grow.”

Continuity is a strong theme, with the management team unchanged.  Nick Beavon retains a minority stake and moves from MD to Sales & Marketing Director, a tangible positive for both the business and his financial returns from the business. Nick enthused “You have done an outstanding job”.

New Managing Director, David Edwards added: “The Polestar team’s input has been invaluable and has delivered an excellent result for all parties.”

“The Polestar team’s input has been invaluable and has delivered an excellent result for all parties”

“You have done an outstanding job”

By Sandy Ritchie on 27/02/2020