Financing Management Buy-In To Overcome CMA Regulations

By Rose Brown
Content writer
Published: 23 April 20231 minute read
Financing Management Buy-In To Overcome CMA Regulations

How finance can help streamline anti competition disputes and facilitate easier buy-ins

The Competition and Markets Authority (CMA) governs competition in UK marketplaces. In recent years, the group has instigated more investigations into mergers which have been seen to reduce competitiveness. In these interventions, opportunities can arise for management teams looking to become owners.

Table of Contents

The CMA is tasked with ensuring that fair competition remains a factor in all UK business markets. In a perfect world, no company would have a monopoly in any given sector – but recent years have given rise to tech giants and firms which do seem to overshadow all others. For the CMA, this is a problem that must be addressed. 

In some cases, this is enforced by rulings issued to businesses that seem to use mergers and acquisitions to dominate their competition. The CMA aims to dissuade businesses from acquiring all of their competitors and becoming the sole operator in their space. In some cases, the CMA may expect a business to offer undertakings for an acquisition, in which the buyer must sell the business they’ve just acquired. This creates exciting opportunities for management buy-outs…

Why was there a problem?

For a client that approached Rangewell recently, their entire world had been turned upside down when a larger business bought the company the client worked for. Our client was a senior manager in their company, but felt powerless when news of the acquisition came through. 

However, the CMA stepped in to rule that the sale ‘significantly reduced competition’ under the Enterprise Act 2002. As a result, the buyer had to demonstrate sufficient undertakings to address their concerns, which meant selling the business. 

Unfortunately, the niche industry both businesses operated in meant the buyer struggled to attract interest in the sale. Instead, the acquired business’ senior management team decided to purchase the business back from the initial buyer, reasserting control and re-establishing competition in the market. 

The buyer, facing both CMA rulings and a lack of market interest, recognised that the buy-out was the best option to ensure they profited from the process and adhered to the CMA’s decision. Unfortunately, this also meant the management team needed to raise enough finance to satisfy a £7.8m valuation. 

Why we were able to help

The management team needed to raise finance, but they lacked the necessary capital. They did not have experience as owners, so banks and other lenders were hesitant to offer favourable terms. 

Fortunately, they approached Rangewell for our help, which we were happy to provide at no cost to the team. When you need finance, a successful application depends on your circumstances and your application. Rangewell can help you maximise your offer by tailoring your application around what lenders expect, as well as strengthening negotiations on your behalf. 

For the client in question, we were able to arrange for 3 individual finance deals to the senior managers, creating a £7.8m loan repaid over 3 years. To ensure the loan offered the best value, we helped demonstrate how the 3 manager’s experience and goals would deliver growth and profitability, satisfying lenders and removing risk. 

The acquisition also meant the CMA could step back, having fully restored competition in the industry. 

Finance for CMA developments

If the CMA has issued a ruling that affects your business, whether it’s one that expects you to sell a portion of your company or release a newly-acquired brand, Rangewell can assist you with organising and applying for finance. Working with us won't cost you anything, so if you think you’ll need to raise capital to overcome CMA rulings, get in touch today to see how we can help. 

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