Solicitors for a Management Buy Out

A Management Buy-Out (MBO) is a transaction where a company's management team acquires ownership of the business from the existing shareholders. This allows the managers to become owners and steer the company in their desired direction. MBOs can be attractive for both the management team and the sellers, offering potential benefits like:

• Management team - increased autonomy, control, and potential financial gain.

• Sellers - clean exit strategy, continued value creation (through ongoing relationships), and potentially higher price than traditional sale.

How does an MBO work?

The usual steps involved are :-

• Planning and Valuation - the management team, often with advisors, assesses the target company's value, feasibility of the buyout, and financing options.

• Funding - secure funding to purchase the company, typically through a combination of debt, equity, and personal investment from the management team.

• Negotiation and Due Diligence - both parties finalise the transaction terms and conduct comprehensive due diligence to uncover any potential liabilities or risks.

• Legal Documentation - including the share purchase agreement, loan agreements, and shareholder agreements.

• Completion - the transaction is completed, ownership transfers, and the management team takes control of the company.