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The fund will be mainly targeted at teams that have considerable public sector experience and innovative business ideas to help Government drive efficiency and deficit reduction.
MITIE will offer support in the form of equity, working capital, management expertise or back office help to management teams with a viable business plan to develop a mutually-owned business.
While the fund is mainly aimed at public sector know-how, MITIE is also prepared to back good ideas from the private sector.
The MITIE names stands for Management Incentive Through Investment Equity and the contractor boasts a history of helping 80 successful start-ups using the ‘MITIE model’ .
Ruby McGregor-Smith, MITIE’s chief executive said: “We are passionate about providing opportunities for people to develop their careers and grow successful outsourcing businesses.
“With the launch of this fund we hope to attract dynamic entrepreneurial teams that want to start mutually owned businesses which provide innovative services to their customers and create jobs in the UK.”
If you have an idea for a business visit www.mitie.com/entrepreneurs.
- A team that wants the opportunity to run a mutually owned business approaches MITIE with their business idea.
- Provided that their business idea fits with our strategy and does not conflict with any of our existing businesses, we interview the team.
- If we like the business idea and the team they prepare a business plan.
- There is then an approval process which concludes with sign off by the Executive Board.
- The business plan determines the capital requirement. MITIE invests at least 51% of the initial capital required and the management team invests the balance.
- A limited company is established, placed in MITIE’s structure depending on the business activity being pursued. The start-up business is sponsored by a Executive Board Director and supported by the Head Office team.
- The team grow their business over the next five to ten years.
- Between the fifth year and the tenth year the minority shareholders have an opportunity to serve a transfer notice on MITIE Group PLC to earn out their minority interest.
- In order to calculate the value of the minority stake in the business we use an agreed multiple of post-tax profits averaged over the previous two years, or three years depending on the type of business.
- The management team stays in place after the earn-out and continue to grow the business and progress their career within MITIE.
How does the MITIE start-up model work?
The model has operated since MITIE started in 1988. The process develops as follows:
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