Management Buy Outs / Buy Ins

Management Buy Outs / Buy Ins (MBOs/MBIs) are an ideal opportunity for managers to satisfy their entrepreneurial aspirations and a chance to acquire a significant equity stake in a company. SamCorp’s experienced and knowledgeable team has been advising clients on MBOs and MBIs for over 15 years.

Management Buy Outs (MBOs)

Managers may not be involved in more than one MBO in their lives and appropriate advice at an early stage is sensible when embarking on such a complex and sophisticated transaction.

MBOs are a core skill of SamCorp. We will project manage the whole process through to legal completion in order to allow business owners and managers to importantly remain focused on the operational running of the business.

Management Buy Ins (MBIs)

Where there are no obvious successors or the existing managers do not wish to purchase the business, an external management team can effect a Management Buy In.

MBIs can be difficult to negotiate, both from the perspective of the vendor who will wish to minimise uncertainty for the existing workforce and from the MBI team, who will need to grasp a complete picture of an unfamiliar business in a short period of time. They can, however, refresh a business and generate renewed growth by bringing in additional expertise and a different perspective.

What we offer

  • Tailored advice to businesses across all sectors
  • Discreet meetings with the team to refine the MBO/MBI proposal and advise on likely funding sources
  • Negotiate terms with vendor(s)
  • Strong relationships with equity and debt providers making us well placed to access funds

How we can help with your MBO/MBI

By appointing SamCorp as your specialist adviser we will ensure that:

  • The feasibility of the MBO/MBI is properly assessed
  • The right price and terms are negotiated
  • Access is gained to the most appropriate sources of finance
  • You have a high quality, credible business plan to present to funders
  • The whole process is effectively and competently project-managed

MBO Funding

Through our extensive network of equity and debt finance providers, we can advise you on which funding options would best suit your needs.

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Management Buy Out/Buy In FAQs

What is expected of the management team?

Financial backers will need to be convinced that the management team has the necessary experience, can demonstrate a successful track record, has a well balanced range of skills and can manage the business independently i.e. without the input of the existing owner.

Management will also need to convince their backers that they have a sound growth strategy and that they are capable of implementing it.

How is an MBO/MBI funded?

MBOs

Most management teams think an MBO is out of the question because they do not have the full funds to buy the company. In actual fact, the management team are usually only required to invest a relatively small portion of the overall consideration as the rest is funded by institutions such as a bank or private equity house.

The amount of that investment will be dependent on personal circumstances and the extent of any existing shareholding in the business. A broad ‘rule of thumb’ is a sum of money that equates to one year’s salary for each team member.

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MBIs

As with an MBO the majority of the funding for an MBI is from institutions. The management team members will be expected to invest sums that are seen by backers as sufficient to provide “hurt” money given their personal financial status.

When should we approach the vendor?

Without a willing vendor the deal will not happen, so an approach will need to be made early in the process. It will depend on individual circumstances as to whether it is more appropriate for you or your corporate finance adviser to make the approach.

For an MBO, dealings with the vendor need to be handled carefully as the management team will be employed by the business during the MBO process and possibly thereafter should the deal not complete. Sensitivity is paramount. Until vendor approval to progress the MBO opportunity has been obtained, care should be taken to observe your fiduciary duties to the shareholders of the business.

The timing and nature of the approach is a critical area, an aspect on which your corporate finance adviser will guide you.

How long does an MBO/MBI take to complete?

Completing an MBO/MBI can easily take between 6 to 9 months and sometimes even longer depending on the complexities and the willingness of those involved to take a pragmatic approach.

How much does an MBO cost?

The overall costs of completing an MBO can be substantial and will typically amount to anywhere between 5% and 10% of the deal value.

A corporate finance adviser will ensure that the costs, where possible, are contingent upon a successful completion of the MBO, thereby protecting the management team from any material personal liability.

The amount of funding raised for the transaction will be sufficient to enable all of the deal costs to be settled by the newly formed ‘MBO’ company, on completion. Occasionally vendors can be persuaded to underwrite an element of the purchaser’s costs to reinforce their commitment to the successful conclusion of the deal.

What is a BIMBO?

A BIMBO is a form of buyout that incorporates characteristics of both a management buy out and a management buy in. A BIMBO occurs when existing management – along with outside managers – decides to buyout a company. A BIMBO reduces the risk of the MBI while bringing additional skills to complement the incumbent management team.

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What our clients say

Darren Hurdle of SamCorp was instrumental in us achieving this result. He ensured we were providing the right information, in the right format, to the right people, at the right time so that we were able to clearly articulate our ambitions for the business and ultimately gain the support of the funders. His links to local professional services and the wider finance groups was extremely important to us as well. I enjoyed having him working alongside us, guiding us through the process in a way that was encouraging and helpful without resorting to jargon.

Steve Merritt - European Process Plant

The advice offered by the SamCorp team throughout the process was invaluable. The buyout was far from straightforward and there were several occasions where it looked like it may not happen. The positive and determined attitude of the team at SamCorp kept the momentum going, whilst always working to ensure our best interests were met. We are really pleased with the outcome and look forward to starting our new chapter.

Jon Godbold - CCS Collect

SamCorp started by advising on the initial acquisition and progressed to help find the right equity and funding partners to fund our growth. Throughout the process I found them to be professional, hard-working, and with a keen understanding of the trials and tribulations that all such transactions inevitably go through.

Jon Onslow - IGF Invoice Finance

Taking this transaction to completion was always going to be complex so finding the right corporate finance partner was essential. What impressed us about SamCorp was their depth of experience, natural enthusiasm and they felt like people we could work closely with. I would highly recommend SamCorp and won't hesitate to use them for our next transaction.

Phil Dunk - River Marketing ltd

The support and advice from SamCorp on this transaction was invaluable. They were always on hand to deal with any issues that arose and were a great help at every stage of the journey. They quickly gained an understanding of our business and worked tirelessly to take the transaction to completion. We thank them for helping us to get through the whole process successfully.

Sue Burley - DW Plastics Ltd

Completed MBOs/MBIs