GEX Management Inc (GXXM)

[StockRoomBully]

**MBO SUCCESS STORY ** DONE RIGHT

"R.S.T. Instruments Ltd.
Overview
R.S.T. Instruments Ltd. headquartered in Maple Ridge, BC,
is a category-leading geotechnical device manufacturer with products installed in all seven continents and sales
in more than 120 countries worldwide. Selling more than 100 original products, RST has gained market esteem as
the top innovator in their industry.

Process
The core management team was made up of three key figures, the CEO, COO, and Director of Field Services. All
three members brought a needed skill to the management team and enabled them to take over RST and grow it.
All three shareholders were required to provide personal guarantees for lenders to support the buy-out.
The key to the success of this buy-out was that all three
shareholders had aligning interests and believed in the growth story of RST Instruments.

The vendor at the time was focused on other businesses and understood the value that the management team brought to the table.
A guiding principle during thenegotiations was to balance the objectives for the share sale, liquidity, and financing with the need to uphold strong relationships between the vendor and the management team.

Outcome

The purchasing management team acquired 100% of the shares held by the original owner.
A capital structure was put in place to facilitate the company’s growth prospects and provide flexibility to
operations.

This came in the form of senior debt, sub-debt, and capital from the respective management team.

In the end, the shareholders realized their strategic plan
and sold the company for a significant return.

Conclusion
When done right, a management buy-out can provide liquidity to an existing shareholder/vendor while allowingmanagement to take an ownership stake in the business.
It can be a win-win for everyone, while ensuring the future success of the business. With over $500 billion in PE fund “dry powder” looking to be deployed, the market for buy-outs is optimal with companies reaping the rewards.


Atonomy of a Managment buy-out Deloitte