Management buyout (MBO)

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Management Buyout (MBO)

Management Buyout (MBO): key facts

An MBO is when a company’s existing management team buys all or part of the business they currently manage.

Usually, managers contribute some personal funds and third parties fund the majority.

MBOs can appeal to sellers, as the management team already understands how the business works. This makes them well-equipped to sustain and grow the business post-purchase.

Asset finance: Leverage the company’s assets, such as property or inventory, to release cash for the MBO.

Term loan: Borrow a lump sum and repay it over up to 5 years, with interest.

Mezzanine finance: Bridge the gap between the capital you’ve raised and the company’s purchase price.

Funding structure of an MBO

Benefits of an MBO

Common MBO finance options

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Disclaimer:

Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options will receive a commission or finder’s fee for effecting such finance and insurance introductions.

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