The Steve Stuart Partnership - Corporate Finance Solutions

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Management Buy Out

Management Buy Out

Where do I start? What will it cost? What is in it for me? What are the risks?

An MBOis the purchase of a business from its owners by the existing management team with the bulk of the finance being provided by financial institutions, primarily banks and private equity houses. It is certainly possible for the MBOteam to make substantial capital gains in this type of transaction, but only if the deal is right. The risks can be high.

Common risks include:

  • Paying too much for the business
  • Taking on too much debt
  • Management being distracted during the pre-completion period
  • Over-ambitious plans for expanding the business

"You should only borrow what the business can afford to repay"

To minimise the risk, we can help you:

  • Assess the viability of the proposition
  • Review the growth strategy within the business plan
  • Value the business to be acquired
  • Devise the optimum deal structure
  • Select the best funders and negotiate financial terms
  • Negotiate with the vendors and their financial advisers
  • Manage the project through to completion and beyond