Management Buy-Out

A management buyout (MBO) is the purchase of a company from the owner by its present management team.  The purchase price is normally met via a small affordable investment by the Management Team, a significant investment by external Private Equity or debt funders and a possible structured deferment of the purchase price via the owners.

MBOs are often considered in the following situations:

  • Where a business owner wishes to retire
  • When a corporate parent wishes to divest of a subsidiary, often for strategic reasons or to maintain confidentiality
  • Where a trade sale is unlikely, unwelcome or has failed

There are many advantages to an MBO, including:

  • They have a very good track record of success and are therefore more readily backed by banks and other funders
  • They often provide a very useful exit route for owner managers and corporate owners who wish to exit or divest but do not have an appetite to go through a formal sale process to the open market
  • Confidentiality is maintained throughout, particularly in relation to competitors who might otherwise be inclined to request a sales prospectus of the business in order to gain important competitive information about your business
  • The future of the business and its employees is often maintained above that of a trade sale
  • The incumbent management team often have a very hands on knowledge of the business – A key ingredient for the success of any business

CHA Corporate Finance has a considerable amount of expertise at helping shareholders and management teams facilitate an MBO.   CHA can provide a full lead advisory service to the vendor thinking of going down this route allowing for a quick and relatively problem free transaction including organising pre-pack MBO’s to further avoid management/shareholder tensions

In any MBO situation, it is vital to have good quality and well-connected advisors on-board to manage the process and provide the necessary advice at key stages involved.  CHA’s senior management team have all owned their own businesses and have first-hand experience of ownership via the MBI and MBO route.  We differentiate ourselves from others because, in addition to having the wealth of knowledge gained from executing deals and direct access to funding markets, we have experienced the process from your side of the fence and can therefore empathise with your position and support you better considerably improving the chances of success..

For further details, please call us on 0161 871 7450.