Management Buy Ins & Buy Outs
A Management Buyout (MBO)
An effective way for a business owner to realize wealth without significant disruption to their business’s management, staff and customers, while also setting the business up for the long term. Outright Corporate Finance can provide assistance to both existing owners and their management at all stages of the buyout process.
While management buyouts are similar, legally, to any other capital raising or sale-of-company transaction, they have some characteristics that need particular care. Often the management team will be less familiar with the process of a company sale or capital raising. Consequently, we provide the extra service and support needed to ensure a smooth transaction while allowing management to stay focused on running the business. On the other hand, MBOs generally require only limited due diligence and basic seller warranties due to the high existing understanding of the business amongst the buying managers.
Management Buy-Ins (MBI’s) are structured in the same manner as Management Buy-Outs, however they involve bringing a new external management team in to run the business as opposed to the existing management team. For this reason they are less common. Some MBOs involve a combination of the existing management team and new external managers.
Areas in which Outright Corporate Finance offers particular assistance to both the selling owner and the purchasing managers during an MBO or MBI include:
- Outlining the objectives of the existing owners;
- Facilitation of meetings to discuss the goals of owners and management and their personal situations;
- Designing management incentive schemes which will maximize the value of the company for both sides including the implementation of performance hurdles and time-frames;
- Managing the approach to the vendor (if unsolicited);
- Developing a tax effective and equitable structure for both parties;
- Structuring a deal that will support the business into the future;
- Facilitating meetings between parties to establish a shareholders' agreement;
- Sourcing bank or private equity funding, if required;
- Negotiating with banks or private equity funds to finance the purchase.