Ramesh S Mahalingam, Chief Investments & Finance Officer, Finance House, a seasoned finance professional and an articulate speaker from UAE presented an interesting session on the very topical subject of Buyouts on Feb 23, 2008 at a seminar organized by The Institute of Internal Auditors with The Scientific Accounting Association (Qatar University) at the Millenium Hotel.

His talk highlighted the evolution in the region’s capital market over the past 2 decades and specifically on the growing sophistication in the financial arena. He focused on management buyout and quoted real life example of such buyouts from within this region and internationally. He also identified the different types of leverage buyouts and dwelt on the merits of management buyouts vis-à-vis leveraged other types of buyouts

The audience was then treated to an actual case study of a recent management buyout in the UAE – that was the direct outcome of the speakers own initiative. He explained at length how the proposal changed from being an unappealing private equity buyout to a management buyout which immediately enhanced appeal to investors; how a financing structure which was complex and not off the shelves was formulated such that there was enough personal commitment component together with financial assistance; how the owner/seller of the business endorsed the idea of his Management team buying the business and the various formalities that ensued to action this – valuation, creation of a SPV(special purpose Vehicle) drafting of paperwork,  legal due diligence, financial due diligence etc. Mr Mahalingam then walked the audience through the mechanics of an MBO and showed an illustrative time-line for the process.

The speaker then made the session participative by inviting ideas and discussion from the audience on what role the Internal Auditors could play in Buyouts. An interesting and interactive session ensued and the conclusion was that Internal auditors’ involvement doesn’t have to be limited to post-mortem. They could be involved in the Deal Planning stage as part of the core team in terms of risk identification, risk mitigation, They could also be involved in the valuation stage especially if the valuation is done in-house. They could assist with due diligence procedures and finally, after the deal goes through, they could produce a paper on lessons learn for posterity.

The session which was attended by about 80 finance professionals was of terrific value addition especially as the concept of buyouts is still nascent but very topical. It also suited the audience, consisting mostly of internal auditors perfectly as they are constantly required to play an advisory and consultant role in business management and hence need to upgrade their knowledge base regularly.

Chapter president Christian Adonis addressed the gathering emphasizing need for members to keep abreast of latest knowledge and skills available. He also mentioned howQatar as part of GCC is emerging as talent destination with focus on knowledge based economy. There are emerging opportunities for both local and expatriates to contribute. Sundaresan Rajeswar, Vice-President, who coordinated this event, mentioned how entrepreneurial vision of individuals or strategic expansion of companies can be fulfilled with the help of financial advisors who can partner in wealth enhancement by way of leveraging on equity. He thanked Ramesh for sharing his invaluable knowledge and experience. Assaad Kannaan Secretary proposed vote of thanks