Risks and rewards of selling to management

In association with:

Some business owners have a strong preference to sell their company to the management team rather than a trade buyer.

The desire for the management team or other family members to take over the business can also be another key motivator for a management buy-out (or MBO).

While trade buyers may perceive the risks of such a business to be too high to justify the investment required, an MBO is still often feasible because the management team fully understands the inherent risks of the business and each individual is only required to make a relatively modest (personal) contribution to the overall deal funding, the bulk of which will come from other sources (private equity, bank debt and/or vendor deferred consideration).