Question 9-14Read this article about management buyouts.l Choose the best sentence from the opposite page to fill each of the gapsl For each gap, mark one letter(A-H) on your Answer Sheet.l Do not use any letter more than once.l There is an example at the beginning (0). How to launch a management buyout(MBO)The business you’re running has huge potential but the parent company doesn’t seem interested, and there are rumours that they are looking to sell. If ever there’s a time for you and your senior colleagues to mount a management buyout(that is, take over the company by purchasing its shares) it’s now. (0) H . That’s why it’s crucial to examine your motives carefully before doing anything. According to Mark Perchetti, private equity partner at MYT Accountants, one motive for launching an MBO is to build some capital. (9) . And this list is far from exhaustive. Before doing anything else, check the feasibility of a buyout. MBOs are invariably financed externally by borrowing money based on the company’s share value (a leveraged buyout). That’s why yo will need to adopt strategies to sharply increase profits, by cutting costs or expanding, for example. This should enable you to significantly boost the value of the shares a few years down the line. Approach the owners or parent company with your proposal and ask for permission before you disclose any confidential information to venture capitalists or banks. (10) . And what you definitely don’t want is to find yourself out of a job just yet! So, when should you act? Well, it may be easier to raise the capital when business is booming, but paying over the odds is one of the biggest risks you face. (11) . In other words, be careful not to pay too much. Also be careful who you choose for your team; this will typically consist of a CEO and 3-4 directors, but larger deals may bring in lower tiers. There’s no room for sentiment. You may have someone who was fine as the accountant of an operating division, but who you then find is not up to being MD of an independent company. (12) . To avoid this problem you should therefore consider bringing in external talent right from the start. It’s best to keep a low profile until your MBO is pretty much signed and sealed. (13) . This might also mean that your customers, employees and other stakeholders become nervous, especially if there’s a prolonged period of uncertainty. If there are key customers or suppliers whose ongoing commitment you require, wait until the last minute to talk to them. And remember, if you MBO fails, or whatever reason, you may find yourself working with the same colleagues and the current owners of the business. (14) . Do don’t burn your bridges just yet! A Other common reasons are where the business has become non-core to its parent, or where a private owner of a family business is retiring.B If you are unfortunate enough to have to do this, they won’t thank you if you have criticised their abilities or commitmentC If you buy at the peak of the market, you may find it difficult ever to make money.D Financiers want you to put in enough that it would hurt you if you lost it, but not so much that you’d be constantly worrying about it.E If your financiers come to the same conclusion, you may lose credibility.F If your interest becomes more widely known, you risk starting an auction, in which case the price will go up.G Otherwise you risk being turned down at a later stage- and getting your marching orders.H But the stakes are high: get it wrong and you could bankrupt yourself. 9.______ 10.______ 11.______ 12.______ 13.______ 14.______