Are you thinking of proceeding with a management buyout (MBO)? Do you understand the process and the issues that may arise?
Jo Haigh gives an overview of the MBO process and the complexity of the process.
Are management buyouts complicated? Of course they are.
If you’re a director of a firm, your duty under law is to always put the company first. Therefore of course when your buying a business and you’re actually a director of that business, you have an immediate conflict. You should be buying at the most value that you can attract for the business, but at the same time its going to be your money, or at least somebody else’s money that you have borrowed.
If you think you are busy now, try organising a management buyout at the same time as doing your day job, you will have never of been so busy, which is why its so important to have expert help.
You’re probably worried that you won’t have any money, but believe it or not, I have done plenty of deals where the management team have got very limited amounts of money, but we have secured the larger part of the equity for them, because of the way we have structured the deal with investors. And more and more now, vendors are prepared to help a management team facilitate a deal, particularly if they are unable to find a trade buyer.
But, go in to it with your eyes wide open, it’s a wholly different ballgame owning a business, then working in the business, so make sure you are up for that ride.
Learn more about the management buyout process and how we can support and advise you here.