Management Buy In
The purchase of a business by an external manager or management team
M3 has advised many teams through the process of a Management Buy In ("MBI"), helping to source the opportunity, secure the necessary finance, negotiate with the vendors and project manage the transaction to completion.
MBIs are considered by many to be risky transactions as the purchaser doesn't have the benefit of the inside track from being part of the incumbent management team whilst at the same time it is likely that the transaction will be at least partly funded by external finance (equity and/or debt) and hence the financial risks increase as well. Many funders will not provide funding to such transactions but others will. There are also ways of mitigating those risks by structuring the transaction in the right way and by carrying out thorough due diligence.
It should be noted that gone are the days whereby an executive can invest a nominal amount and expect banks and venture capitalists to do the rest. The executive needs to be able to invest a meaningful amount to show their commitment to the transaction and to taking a suitable level of risk for their future reward.
As well as advising on a particular transaction, we spend considerable time and effort with our clients finding the right opportunity via our contact base, via databases and via our research. Once the criteria and approach is formulated, we provide a proactive and focussed acquisition search service for MBI clients. We focus on companies known to be for sale as there is then a "willing seller". Instead of waiting for these opportunities to arise we actively search for them and are also introduced to numerous "off market" transactions. We will carry out acquisition searches of companies not known to be for sale as required.
Once we have helped you find a suitable MBI target we can advise you on:
- Approaching the target
- Assessing the target
- Valuation
- Structuring and making an offer (including carrying out the negotiations on your behalf)
- Raising finance from banks, ABLs, VCs etc
- Project managing of the transaction and other advisers
If you have the entrepreneurial spirit, please contact us for a confidential exploratory meeting.
You may also like to download our guide to MBIs.