Management buy-out (MBO) and management buy-ins (MBIs) are complex yet exciting transactions that need professional project management to ensure that they are completed smoothly, without any negative effect on the business.
What is a Management buy-out?
For an exiting owner, an MBO will offer an attractive succession plan, as there will be continuity of management and no requirement to disclose confidential information to outside parties. An MBO is an attractive option for businesses with retiring owners, a track record of profitability and a strong, motivated management team with a clear vision of the future direction for the business.
What are Management buy-ins?
A MBI is similar but the management team is external to the business. The risks are different, as MBI teams will not have the same detailed knowledge of the business, but the latter could potentially have gained sector experience and could therefore identify the potential a business has to generate good returns to its shareholders.
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How we can help you through the MBO process
A management buy-out takes time and expertise to complete successfully. The MBO process typically takes around 6 to 9 months to complete in our experience. Throughout this process the Menzies Corporate Finance team can provide you with support and sound commercial advice.
As the managers of the business, you need to ensure that the business plan is still being followed, the budgets are being met as well as dealing with all of the day-to-day challenges that a business can throw at you. Having the Menzies team taking a hands-on approach to your MBO means that you can still have sufficient time and focus on running the business, well. We will proactively manage the whole management buy-out process. The elements that we assist with include:
- Valuation of the business to be acquired, deal structure and tax planning.Preparing a business plan and financial projections.
- Raising capital.
- Project management of the transaction throughout.
- Assessing the viability of the proposition.
- Structuring the business.
- Negotiations with vendors and financial backers.
Hear from our clients
“Menzies were critical in the successful acquisition of the Woodforde’s brewery by ensuring that we fully understood the underlying financial performance of the Brewery to underpin our investment case. They also provided us with a clear view on the working capital requirements of the business, which was fundamental to the deal. We have been so impressed with the level of service Menzies have provided us throughout the transaction process and we must extend our thanks to Mike and Ross at Menzies. We look forward to continuing our relationship with Menzies in the future.”
James Hughes, the new CEO of Woodforde’s
“Menzies’ involvement in the buy-out process was instrumental in ensuring its successful completion – not only was the management team offered excellent commercial advice on the terms of the buy-out and assisted with the raising of the required finance, but also we were provided with the emotional and professional support throughout to help us get through what is, in reality, a very difficult and exhausting process”
MD, Recruitment Group MBO Team
Key considerations for an MBO
When considering a management buy-out it is important to have answers to four key questions early in the process, especially when it comes to the attracting of finance for the undertaking. These are:
– Does the company have a strong track record of profitability?
– Does the owner have a realistic price expectation?
– Is there a strong management team in place?
– Can that management team put up an amount of ‘hurt money’?
Benefits of Management Buy Outs
For the owner of a business, an MBO is an attractive option for exiting a business because of the following:
– It is typically low risk
– Information and the process can be kept confidential
– The process is very controlled
– It also secures the future for the business which is often important to founders
Looking for accountants to help with an MBO?
You might be early in the stages of considering a management buy-out, or you may be ready to appoint a trusted and experienced team to support you during the process. Wherever you are in the process, we are happy to talk to you and discuss your needs and situation. Whether the MBO is being considered because a parent company is looking to dispose of part of its business, or it has been triggered because the key shareholder wants to retire, we can help you ensure a positive outcome for all. Our team have helped with countless MBOs of firms across a wide range of sectors and different sizes.
We understand that undertaking an MBO is a sensitive process, so for a confidential call-back or information request please submit your MBO enquiry below.
Contact us in confidence
We understand that this is a sensitive topic so you can be assured that this will be in confidence. Contact an advisor below