Management Buy In

Why be an employee when you can be a business owner?

Managing directors without an equity stake in their business frequently express frustration at not being in charge of their own destiny.

They often cite the following factors as reasons for their frustration:

• Lack of personal investment in the business
• Interference from shareholders
• A sense that they are not receiving just reward for their efforts

If these sentiments echo your own feelings, then one solution — if a Management Buy Out (MBO) of your current business is neither desirable nor possible — is a Management Buy In (MBI).

There is a view amongst employees that the MBI road is a difficult one to travel, perhaps because it can be a challenge to find a suitable business to target, or because investors can be less inclined to fund a transaction of this nature.

MBI teams are also more vulnerable to unearthing skeletons in the business cupboard later down the line because of their pre-sale, limited insider knowledge of the company; and they may be disadvantaged by not fully appreciating the characteristics of the market place within which the target company is operating.

However, these hurdles often stem from a poorly planned and executed MBI.

For instance, in our experience some people initiate an MBI by probing their networks or by asking business advisors to refer them to opportunities that are currently available, and then they buy the first business that seems to meet their requirements.

Is this really the best business matchmaking approach though and is it a sound basis upon which to make a major financial investment?

In our experience, a more considered and proactive approach will stand a far greater likelihood of producing a positive outcome.

For this reason, we have partnered with a number of specialist business advisers to provide a dedicated, proactive service for candidates on our MBI Register.

For further information on the MBI process, please call us on 0113 397 6221 or send us an email. 

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