Management-Buyout Capital Fairness Board Adviser

The mandate

The senior management team of a geothermal drilling-services company has proposed buying the business from dispersed shareholders. Managers prepared the forecasts, selected a funding partner and would roll their existing equity while receiving a new incentive pool. Vendor debt makes the offer executable but exposes sellers to the same plan controlled by buyers. Independent directors need a rigorous economic and process challenge before recommending any path.

The adviser will help the committee interrogate information symmetry, standalone value, financing conditionality, rollover treatment, vendor-note risk and credible alternatives. This is not a statutory fairness opinion or sale mandate. Advice should reveal how insider control over forecasts, customer knowledge, retention and timetable might influence apparent price, and which safeguards permit directors to rely on the process record.

The engagement reserves three days monthly for model challenge, chair counsel and process review, plus attendance at seven independent-committee, management, lender or shareholder sessions during nine months. Written notes will compare the offer with defined stand-alone and alternative cases. Management presentations must be delivered through the committee so that questions and additional information reach all authorised advisers consistently.

The adviser has no line or executive authority, cannot negotiate price, solicit bidders, issue a fairness or valuation opinion, arrange financing, approve disclosure, communicate for the board or vote on the recommendation. The independent committee, appointed advisers and shareholders retain those responsibilities. The adviser can flag an incomplete alternative and recommend an information safeguard but cannot run the transaction.

Appointment ends after shareholder determination or nine months, whichever comes first. One two-month renewal may be approved solely for a deferred vote or revised financing package, subject to a full independence refresh. Any management relationship, shareholder position, lender or sponsor mandate, bidder contact, advisory success fee or potential role after completion is a conflict requiring immediate disclosure and committee-directed recusal or cessation.

Why the board wants this voice

Management holds better operating information while simultaneously acting as buyer, future owner and forecast sponsor. Vendor finance can raise nominal value yet leave selling shareholders exposed to execution they no longer control. Independent capital judgment helps directors test price and structure alongside feasible alternatives, without confusing board advice with a formal fairness opinion or auction mandate.

What you will own

• Challenge management forecasts against contracts, backlog, utilisation, tender timing, maintenance capital and realised forecast accuracy.
• Compare cash offer, rollover, incentive pool, vendor note, earn-out and debt funding across stakeholders and outcomes.
• Model vendor-note recovery under operating downside, refinancing delay, covenant breach, subordination and management control.
• Examine information access, management participation, exclusivity, timetable and confidentiality for procedural asymmetry or bidder deterrence.
• Test stand-alone, recapitalisation, strategic partnership, delayed sale and other feasible alternatives with documented constraints.
• Frame safeguards for forecast sharing, independent negotiation, conflicts, disclosure, shareholder questions and recommendation records.
• Give directors scenario-linked observations distinguishing price, financing risk, incentive transfer, process integrity and unresolved evidence.

Candidate qualifications

• Advised independent committees through management buyouts where executives controlled forecasts and participated in acquisition economics.
• Modelled rollover, incentive pools, vendor financing, earn-outs, debt subordination and downside recovery among stakeholder classes.
• Evaluated credible transaction alternatives and process protections without acting as auctioneer or formal fairness-opinion provider.
• Challenged insider information advantage through controlled access, documented questions and independent forecast assessment.
• Explained nominal price versus risk-adjusted consideration to directors and non-controlling shareholders under confidentiality.
• Maintained independence from management, lenders, sponsors, shareholders, bidders and post-completion appointments.

Non-negotiables

• Can attend seven Reykjavík and European process sessions during the defined nine-month appointment.
• Will disclose holdings, management relationships, financing mandates, bidder contacts, success fees and prospective post-deal roles.
• Brings independent-committee management-buyout experience; general sell-side advice or executive remuneration work is insufficient.
• Accepts no mandate to value officially, issue fairness opinion, negotiate, solicit bidders, arrange debt or recommend as director.

1. 49 words maximum. Describe a management buyout where insider forecast control changed the independent committee’s process.
2. 49 words maximum. How would you compare vendor-note value with cash consideration under operating downside?
3. 49 words maximum. Identify any management, shareholder, lender or sponsor relationship affecting your independence.