Management buyouts

By LBV

03 Jan 2011

Management buyouts (MBOs) occur, in essence, when a management team buys the company they already work for.

They have always been a popular way for an owner to exit their business and pass on the ownership to a management team enabling them to take control of the business.
MBOs give an emotional advantage to the current owner over other potential exit routes. It can fulfil many entrepreneurs’ aim to pass on the business they have created with the assistance of the management team who are uniquely placed to understand the business and take it on to the next level.

Staff also feel more comfortable and clients often benefit from the continuity.

The difficulties and pressures associated with running your own business are often heightened during difficult economic conditions. A number of business owners are reassessing their positions and MBOs are proving a popular option requiring serious consideration. This is particularly happening where the owner is at the autumn of his/her career.

Good management teams are, by their very nature, often younger, and are hungry for the opportunity to take ownership. A well planned MBO gives the owner a chance to prepare the management team and the business prior to an exit taking place.

As businesses have hit troubled times, we have seen instances where a sale to a management team has brought stability and guaranteed the future of a company, whilst giving the owner a chance to exit the business in a managed way.

At Pierce we have advised on a number of MBOs in recent months, including the acquisition of a historic Ribble Valley textile company by management, who have already gone on to expand the business through acquisition.

With any corporate transaction at the moment fund raising is often a problem. However, funders are often keen to back a management team of an established business as long as they have proven they have the right leadership credentials.

In principle, MBOs should be a quicker process than a sale to an unconnected party as the management team will quite often know the business well and be willing to accept reduced levels of warranties and indemnities from the vendors.

This is particularly popular in scenarios where a business needs to move relatively quickly to stabilise itself and move forward.

Tim Mills
Senior manager
Pierce Corporate Finance
 

Enjoyed this? Read more from LBV

Latest news

1

Partington's seeks permission to build £75m leisure destination Partingtons Windy Harbour Visuals

Partington's seeks permission to build £75m leisure destination

24 Jul 2024

2

New road will drive Fylde’s economy forward M55 To Heyhouses Link Road Opening

New road will drive Fylde’s economy forward

24 Jul 2024

3

Eden Project receives seven-figure funding to advance plans Eden Project North 1

Eden Project receives seven-figure funding to advance plans

24 Jul 2024

4

Popular Accrington business says 'bon voyage' after 32 years Extreme owner Lisa Milburn is saying Bon Voyage after 32 years of business in Accrington Town Centre.jpg.jpg

Popular Accrington business says 'bon voyage' after 32 years

24 Jul 2024

5

Together secures £50m to upgrade property portfolio Together Housing Solar Fitting

Together secures £50m to upgrade property portfolio

24 Jul 2024

Bec Web Strip 980x120
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
Lancashire Built Environment Conference
BEC 315 X 315 Px
Networking
25 Sep 2024

Lancashire Built Environment Conference

Conference and Exhibition Centre, Winter Gardens Blackpool, FY1 1HL

08:30 - 13:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
11 Jun 2024 - 04 Dec 2024

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 16:30

Preston Freelancer MeetUp and Coworking Day
Screenshot 2024-06-13 at 13.55.10.png.png
LBV Hub Networking
30 Jul 2024

Preston Freelancer MeetUp and Coworking Day

Society1 Coworking Space, Preston, PR1 3LT

10:00 - 12:00

Skills Bootcamp in Procurement - Cohort 1
Blue-Modern-Land-Travel-Youtube-Thumbnail-2-1024x576.png.png
LBV Hub Seminars
30 Jul 2024 - 08 Oct 2024

Skills Bootcamp in Procurement - Cohort 1

Community & Business Partners CIC, Blackburn, BB2 3UA

09:30 - 13:00

Chamber Breakfast Networking
Chamber Logo1.png.png
LBV Hub Networking
31 Jul 2024

Chamber Breakfast Networking

Pye Motors, Morecambe, LA3 3PF

08:00 - 10:00

Scaling your revenue: From zero to £1m in 60 months
CBP-logo LBV.png.png
LBV Hub Webinar
31 Jul 2024

Scaling your revenue: From zero to £1m in 60 months

Online, Online, Online

08:00 - 09:30

Online Women's Health Clinic
clinic.png.png
LBV Hub Webinar
06 Aug 2024

Online Women's Health Clinic

x, Online, x

12:00 - 12:00

International Coworking Day Open Day
1.png.png
LBV Hub Social
09 Aug 2024 - 09 Aug 2024

International Coworking Day Open Day

Society1 Coworking Space, Prestin, PR1 3 LT

10:00 - 13:00

Knowledge & Networking: Basic Digital Marketing
Chamber Logo1.png.png
LBV Hub Seminars
12 Aug 2024

Knowledge & Networking: Basic Digital Marketing

Lancaster Golf Club, Lancaster, LA2 0AJ

14:00 - 13:00

Understanding Menopause
menopause.png.png
LBV Hub Webinar
15 Aug 2024

Understanding Menopause

x, Online, x

12:30 - 13:15

Sub36 Networking Event - The Bee Centre
Sub36 Socialbee Centre
Networking
15 Aug 2024

Sub36 Networking Event - The Bee Centre

The Bee Centre, Chorley, PR6 8LZ

15:00 - 17:00

Mini Networkers - Family Fun Morning
CBP-logo LBV.png.png
LBV Hub Networking
16 Aug 2024

Mini Networkers - Family Fun Morning

Community & Business Partners CIC, Blackburn, BB2 3UA

10:00 - 13:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV116 Online Graphic
Subscribe now

Weekly news bulletin