MBO, MBI and BIMBO

  • MBO – the current management team agree a deal to purchase the business from tmanagementhe owner.
  • MBI – a management team come together to look for a business to buy and run.
  • BIMBO – a combination of MBO and MBI where the incumbent management team hires additional member(s) into the team in order to compete the deal. This typically happens when in a MBO situation the exisitng management team realises they are light in say finance or business development and they identify someone with the skills required to complete the deal.

MBOs and BIMBOs have become an increasingly used succession/exit planning strategy for business owners who are either looking to retire, semi-retire or completely move out of the industry they are in.

They are popular because the business is passed into the control of an already established and trusted management team.

There are other benefits in that the sale process is normally quicker, MBOs help to ensure that key people in the business remain in place post sale and there is less probability of the sale process failing.

The downside, is that a trade sale is likely to achieve a higher price, however there are less guarantees for the workforce from a trade sale, which could have a significant impact on the legacy the departing owner leaves behind.

Usually a MBO is structured by forming a new company or acquire the shares of the existing company, there are other ways of doing it but in our experience this is most common.

The MBO team invest their own capital and fund the balance from other funders e.g. asset based lenders, private equity, venture capital, angel finance.

How can we help?

  • Conduct a feasibility study for the management team, including developing the business plan, projections, key sensitivities and how these may impact on the business.
  • Conducting business valuations, due diligence and tax diligence (both corporate and personal for each director).
  • Negotiating with the business owner(s), lenders/funders and other advisers involved in the deal.
  • Assisting your with the legal documentation, agreements.
  • Post deal support – completion accounts, deferred considerations and corporate & directors tax planning.
  • Tax: transactions & asset purchases.