Management buyouts and buy ins

As a senior manager, you’ve scaled the ladder and steered your company true. You’ve proved your ability tenfold and now you’re ready for the next step: business ownership.

An MBO or MBI can give you this opportunity – and all the independence, recognition and reward that come with it.

(Are you a business owner selling to management? Read about succession planning and succession buyouts).

What is a management buyout (MBO)?

A management buyout is a way to take over the company you’re working for. This is a popular option because it makes you the owner of an established company you care about.

A management buyout is very flexible – a good corporate finance adviser can structure a buyout to suit your needs and capabilities.

You have plenty of options for funding a management buyout too. For example, a leveraged management buyout uses assets in the company as collateral, while loan notes are essentially an IOU to the owner. Or you could consider raising finance from a bank or private equity firm.

As well as giving managers a once-in-a-lifetime opportunity, an MBO can be attractive to the existing owner too. Among other reasons, they may feel happier leaving their company in the hands of a team they know and respect.

What is a management buy in (MBI)?

A management buy in (MBI) is similar to a management buyout. The key difference is you’ll be buying out a business you’re not currently working for. You might choose to do an MBI if, for example, your company’s existing owner doesn’t want to sell up.

How does the MBO process work?

We’ve explained management buyouts in eight steps, so you know what to expect and how we can help:

Our first chat

The first thing we’ll do is listen: we want to hear about your background, business and reasons for doing a management buyout. This gives you a chance to bounce ideas off us and qualify your plans. It also means we can make sensible suggestions about your options.

Scoping out the work

Next, we’ll discuss the level of support you need for the MBO/MBI and draw up an agreement between our team and yours. We’re upfront about expectations, scope and fees, so there won’t be any surprises down the line.

Approaching the owner about a management buyout

It sounds awkward, but you needn’t worry: we can help you kick off the discussion. We’ll sit with you to assess the owner’s interest in a management buyout and protect your relationship with them. Of course, we’ll also move you into a strong position for negotiation.

Deciding the management buyout structure

Management buyouts (and management buy ins) are wonderfully flexible. Thanks to our team’s expertise, we can shape yours how you like. We won’t swamp you with corporate finance jargon either – we’re big believers in plain English and proper explanations.

Finding MBO finance

We’ll help you decide the best way to get management buyout funding. Next, we’ll help you put together a sturdy business plan and financial projections. We’ll introduce you to financiers and present you in the best light.

Negotiating the management buyout

We know it’s strange negotiating a management buyout with your boss. But we can act as a buffer – protecting and fighting for you at the same time. We’ll arm you with the facts you need to feel confident too. With us on your side, the boardroom will feel like home turf.

Legal and tax work

We can bring in trusted partners to take care of legal and business tax work. We’ll oversee this stage, while keeping you informed and answering any questions.

Completing the management buyout

This can be a tense time, but we’ll give you the confidence and support to see the management buyout through. We won’t disappear at the signing of contracts either – we’ll stick around to ease you into business ownership.

A practical guide to MBOs

Download our practice guide to management buyouts to learn about the basic terminology, getting started, and how to make it happen.