TOOLS FOR LEADING AN MBO TEAM.

• Author: Moriarty, George B.

For success in what one COO of a management buyout firm dubs the "manager's decade," he details three issues that are central: what skills the executive needs, what preparations need to he made and how to manage the exit.

In recent years there seemed to be no end to the feast available at the public equity market trough, especially for management teams that wanted to separate from larger enterprises. The good times ended abruptly, and in order to finance operations, management teams now have to consider other options.

Among the myriad of financial instruments available to capital-seekers, perhaps the murkiest option is private equity. While there is a wealth of information available on the process for managing through the public debt and equity markets, private equity deals have been hidden under a cloak of secrecy, and financiers answer nearly every query on standardization with "every deal is different." Of course, so is every IPO.

However, Rick Rickersten sees this as the "manager's decade," and he sees particular opportunity for financial executives. Rickersten is chief operating officer at Washington, D.C.-based Thayer Capital, a firm specializing in management buyouts. In Buyout: The Insider's Guide to Buying Your Own Company (AMACOM, 2001), published earlier this year, Rickersten removes at least one layer of opacity from the private equity process.

"The thing I like the most about the management buyout world, is working with the managers," Rickersten says. "I have always thought it would be better for everyone if there was more transparency to the process," which, he says, is why he wrote the book.

Long associated with the buy-and-bust model of the late 1980s, which was given form in Barbarians at the Gate, the leveraged buyout has become more manager-friendly in the intervening years. The environment has changed significantly in that there is a phenomenal amount of capital pouring into the market -- more than $100 billion since 1999, according to Buyouts, an industry newsletter, and the number of players has increased as well. Now, firms have a limited number of partners managing so many deals that they can't become involved with day-to-day operations. As a result, firms investing today want to have a management team they can trust.

Buyout offers insights into the investor mindset, as well as valuable information on how financial executives should prepare themselves for the arduous process. Rickertsen focuses on three issues that...