Management buy outs (MBOs) and buy ins (MBIs) are a common transaction for business owners looking to retire or otherwise move on from their company. As with all legal transactions, they can be complicated and challenging to negotiate without the right legal advice.
A Management Buy Out (MBO) is a transaction where the existing managers of a company purchase all or part of the business from its current owners. This is a popular option because the existing team understand the business, its history and its staff, and so can ensure continuity once the transaction is completed.
There is typically less due diligence involved in an MBO than MBI as the management team are familiar with the company and the assets involved in the purchase.
This type of transaction is often used to provide capital for growth or expansion and can also be used as an exit strategy for founders or other senior executives without selling the entire business.
A Management Buy in (MBI) is different from an MBO in that the business is acquired by an external management team; in an MBI an outside investor generally purchases a controlling stake in the company from existing management. While this can cause issues with continuity and company experience, it can also bring new ideas and investment into the business.
For any successful management buy-out or buy-in, both sides of the transaction must agree on a wide range of sometimes complex terms such as price, structure, financing options, and other details related to the deal before it can be finalised. Both sides will usually also need to carry out detailed investigations and due diligence before going ahead with the transaction. It is therefore important to receive practical, specialist legal advice from the start of the process.
Sweeney Miller’s Corporate lawyers are experienced at advising both buyers and sellers in MBO and MBI transactions, across a variety of sectors and company types. We can help to manage the whole process from initial discussions to completion. We understand the challenges that come with both MBOs and MBIs and are experienced in liaising with both management teams and vendors, we can suggest possible deal structures, and offer guidance on fundraising options and other practical issues that can arise during the process.
To speak to a member of our experienced MBO and MBI team, call us on 0345 900 5401, email enquiries@sweeneymiller.co.uk or use our contact form.
