Exit planning strategies – Management Buy-in’s (MBI)

In the last blog I briefly looked at MBO’s  – now let’s look at  an exit planning strategies, eg Management Buy-in’s (MBI) for you as an owner manager to get the financial results you deserve after spending many years of hard work into making a success of your business.

Management Buy-Ins (MBI) are similar to an MBO but it is the preferred option of choice for those looking to sell to a manager or management team who are outside of the existing company.  Often this arrangement will involve an outside investor to assist with the funding of the MBI.  This is of particular relevance when there is no obvious internal succession path.

From an emotional viewpoint MBIs can cause uncertainty within the existing stakeholders – specifically employees – as they may not know the new management. Also Time and care must be taken ensure continuity is maintained from a commercial point of view.

The benefit of a MBI
A MBI can be the best case scenario for many business owners who wants the business to be revitalised and have access to new skills and expertise very quickly. This route has several significant advantages:

  • Outside investment can often refresh a company and lead to renewed growth.
  • A new management team can bring in new ideas and skills.
  • The buy in team will not need to personally raise the necessary financing and again it will not need to be repaid from their personal taxed income.

Experience has taught many owner managers in the same position that this hard work can quickly count for little or nothing if your exit strategy is not well planned and implemented in advance of your actual decision to sell or step down.   We (CMC Partners) have considerable experience in negotiating and implementing MBOs and MBI’s, making the process simple and efficient (read painless) for all parties.

We can advise either of the MBI teams, specifically advising the current owner on all aspects of the buyout, including finding the buy in team, creating the MBI vehicle and liaising with HM Revenue and Customs.

Over the past 20 years CMC have advised many owner managers on how best to develop Exit planning strategies. Phil McConnell himself has been involved in the sale of several companies in which he was a significant shareholder. Future blogs will describe the benefits others type of exit strategies, including a trade sale and a company purchasing its own shares. If you wish to discuss how to get the results you deserve, contact us via this form.


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