At Succession Planning Ltd, we are expert advisors on all Management Buy Out (MBO) related matters and provide in-depth and comprehensive advice on the MBO process from:

  • Feasibility
  • Finance and funding
  • How to approach the business owners
  • Compiling a shortlist of lenders
  • Business valuation and all aspects of negotiating with the vendors and finance lenders

Who is MBO applicable to?

We work with management teams seeking to purchase the business in which they are employed. Regardless of your sector, if you have ambitious plans for the further growth and expansion of the business, our extensive knowledge and experience consulting on MBO’s is invaluable to our clients. For many of the management teams we work with, an MBO may be their first corporate transaction and we are on hand to assist at every stage of the process.

How are MBOs usually funded?

In most cases, management teams will not have the personal finances in place to fund an MBO and so additional funding is often required. Some of the typical funding sources on MBO deals are:

  • High street & Private Debt – High Street banks will often be open to the possibility of a ‘cash-flow term loan’ repayable over a period of say 3-5 years in order to help support an MBO. In recent years, private debt funds have become more commonplace as a viable alternative to the conventional high street lenders
  • Asset Finance – This type of funding enables businesses to utilise assets in their company as leverage to secure funding. These can be in the form of property, debtors or stocks and can be a very practical solution for asset rich businesses
  • Vendor loan notes – In many cases, the sellers often have to assist in the funding of the acquisition and therefore some of their consideration remains in the company as ‘loan notes’ that are to be repaid over an agreed period
  • Private Equity (PE) – PE Funds look for opportunities where the core business is strong and has good growth prospects, as well as a solid management team to take the business forward. The Private Equity route also has additional benefits beyond funding in terms of an advisory role for the management team and can help to expand the business.

How long is the MBO process on average?

Every transaction is different of course, but on average, you can expect a management buyout to take anywhere from 4 -6 months.

Do I need an MBO Advisor?

We have a wealth of experience in dealing with and negotiating successful MBO transactions and are experts in ensuring the process is handled smoothly with as little disruption to the business as possible. Without an experienced MBO advisor in place, management teams can sometimes struggle with business valuations and their post-purchase growth strategy as well as underestimating the financial commitment that a lender will want the management team to make, to highlight just a few of the most commonly seen issues.

What are the charges?

In general terms, our clients are charged a monthly fee with a ‘success fee’ on completion of the transaction.

Next steps?

If you are looking for more information on the MBO process, please contact us to discuss your requirements with no obligation. Our approach is tailored to the specific requirements of each situation to ensure you are guided through these often sensitive situations and a successful outcome is delivered for all parties involved.