Management buyout (MBO)

A management buyout can make an excellent succession strategy for a business. WMT provides specialist advice on management buy outs (MBOs), management buy ins (MBIs), and employee buyout (EBOs), to business owners or management teams. Working with them to plan and manage the project from beginning to end, we maintain the momentum needed to reach a successful outcome for all parties.

What is a management buyout?

A management buyout is an increasingly effective exit strategy for business owners, as the ownership and the control of the business pass to the hands of a trusted management team.

For the management team, it represents a once in a lifetime chance to buy a share in a business that they know and understand, for a relatively small consideration.

Benefits of a management buyout

• Perceived as low-risk, with less warranty and indemnity cover needed due to the management team’s close working knowledge of the business.
• Faster sales process with less due diligence than an open market sale.
• Rewards the management team, as they can take a share of ownership and determine their own future.
• No need to market the company for sale.
• It can be initiated by the vendor (VIMBO); you do not need to wait for management to approach you.

What is required for an MBO?

• A management team with a track record of achieving profits and growth.
• A viable business plan backed by detailed financial forecasts.
• Realistic seller expectations of the value of the business to a buyer.

How we help your management buyout succeed

An MBO is time consuming and, at times, emotions can run high. Experience of acting on both the buy and the sell side of MBOs, enables us to anticipate and resolve conflicts before they become a barrier to success, managing the interactions between parties and keeping the process moving forwards.

Business owners rely on our expert view on the terms they are offered by the management team. We check they are competitive in headline terms and that the split between cash paid on completion and deferred payments offers fair value.

When acting for the management team in the lead advisor role we will:

• Prepare a valuation of the business based on our detailed financial projections and review the feasibility of the transaction.
• Discuss and negotiate the terms of the offer with business owner and their advisers.
• Help you prepare a funder friendly business plan and financial forecast.

• Approach funders and negotiate the terms of your finance.
• Project-manage the deal from inception to its successful completion, coordinating activities with all other parties to keep the project on track.
• Develop a transition plan to be implemented when the deal is complete.
• Advise on related matters such as shareholder agreements and directors’ remuneration.

Our approach

Your goals will sit at the centre of the MBO. Understanding them is the first step in our approach. Once we understand what you want to achieve, we can advise on whether an MBO is the best route forward, or if there might be a better option for you.

Get in touch with our corporate finance team to find out more about which buy out option is best for you and your business.