MBI (Management Buy-In) involves an external management team buying into a company to take control, aiming to utilize their expertise for growth.
MBO (Management Buy-Out) occurs when a company's existing management team buys out the majority of shares to take over the business, often to continue its operations with a deep understanding of its workings. MBI brings in new leadership, while MBO keeps the leadership within the company but shifts ownership.
MBI (Management Buy-In) and MBO (Management Buy-Out) are suitable for different types of businesses under varying circumstances:
Items to consider:
Successful MBO/MBIs require careful planning around funding structure, equity allocation, and security packages. Management teams must demonstrate clear succession plans and the ability to operate independently. Strong financial controls, reporting systems, and governance frameworks need establishing pre-completion. Early engagement with experienced advisors helps optimize outcomes and maximize execution certainty.