Reducing BIMBO debt risk
A Supply Chain firm, cash generative but requiring rejuvenation.
In essence this was a BIMBO – a Buy-In Management Buy Out. The Buyer Group was jointly led by an external investor with financial expertise and the Operations Director in place. The consideration was funded by bank debt with only minor Deferred Consideration.
The two leaders of the Buyer Group recognised they had complementary skills, both of which would be required to pay-down the debt and generate cash flow to the new shareholders.
FAB put in place three tranches of Debt Insurance which matched the terms and repayment schedule of the loan. This insurance was on a ‘Joint Life, First Death’ basis so that the full amount of the Debt would be cleared in the event that either of the two business leaders died. Their families would then own a business asset with free cash flow, unencumbered by bank debt.
Sums Assured: £5 million
Lifes Assured: 9