MBO & MBI

A management buyout (MBO) lets the management team of a business acquire it from its owners with the help of financial backers. It provides managers with a once in a lifetime opportunity to own their own business and enjoy financial rewards that exceed those of a salaried individual. A management buyin (MBI) is similar but some or all of the management team is external to the company.

The key factors to making any MBO/MBI work are:

  • a well rounded and ambitious management team
  • the ability to leverage the business
  • a willing vendor with realistic price expectations

MBO has become a popular form of exit for many owner-managers and large corporate entities over the years. We have helped to deliver many management buyouts, all of which had their own complexities.

Succession buyouts

We specialise in helping business owners to achieve succession by selling to their management team. This type of transaction is sometimes called a VIMBO (vendor initiated management buyout) or FAMBO (family buyout). We call it a succession buyout as this best summarises its benefits.  

To deliver a succession buyout we typically work with the business owner to structure a deal that is fundable, gets them good value for their business, and is a good opportunity for their management team. The tax aspects are complicated, but we work closely with PEM's tax specialists to ensure tax efficiency.

We believe a succession buyout revolves around the people involved. It is about making the deal work for all parties and managing the communication between the current owner and the new team.

We also help with the traditional form of MBO, which occurs when a corporate group disposes of a non-core businesses by selling it to the management team.

MBO Process

This can be time consuming and stressful. As advisers we guide and help you through each stage of the process. These include:

  • Feasibility assessment
  • Writing a business plan
  • Management presentations to potential financiers and selecting the best offer
  • Vendor negotiations
  • Legal documentation
  • Project management to completion

We help you create a business plan that is attractive to the banking and venture capital market, and we introduce you to our key financier contacts. We often work with management teams to:

  • build bespoke financial models
  • provide an indicative valuation on the business
  • advise on structuring
  • represent them in negotiations with the vendor and financiers

MBO case study: Alacer Software

You can find out more about our approach to raising debt and equity finance on our raising finance service page.

Please get in touch if you would like to have an informal discussion about your business plans or requirements.

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