What is a management buyout?
A management buyout or “MBO” is the purchase of a company or business by all or some of its existing management.
A management team faced with the possibility of initiating or taking part in a buyout has a unique and exciting opportunity. It is often best placed to formulate a clear strategy to grow and develop the business and can create significant personal wealth for its members in the process.
Opportunities to carry out MBO
Opportunities to carry out a buyout arise for a variety of reasons:
- The owners of the business may wish to retire.
- The business may no longer be considered as core to the whole company or group.
- The business as a whole may be having financial difficulties and the owners may wish to sell off assets to improve cashflows.
How does an MBO work?
A management buyout is usually carried out by incorporating a new company (“Newco”) irrespective of whether or not the business being acquired (“the Target”) is incorporated (a limited company) or not.
If the Target is a company (“Target Company”), Newco becomes the new holding company for shares in the Target Company, usually acquiring all the shares.
If the target is not incorporated (“Target Business”) then Newco will acquire the trade and assets of the Target Business.
Irrespective of whether the Target is a company or an unincorporated business the buyout team, along with any private equity investors, will take shareholdings in Newco. Sometimes the vendors will retain a small shareholding by becoming shareholders in Newco.
Our track record
We have a long and successful track record of completing management buyouts for our clients.
Over recent years we have been awarded several Dealmaker Awards in recognition of our deal execution expertise.
You may be considering a buyout. We can make it happen. We are committed to providing you with proactive advice and “hands on” support so that your transaction can be completed efficiently.
Please contact us for a free no obligation discussion.