enabling a management buy-in

Have you been offered you the opportunity to become the owner of a business through a management buy-in (MBI)? Or have you set about to find an opportunity to acquire a platform for your new venture? Our management buy-in advisory service and M&A experts support management teams to secure the funding and manage the process to ensure the transition to new company ownership happens.

Book a meeting

TRUSTED BY businesses across the UK

WHAT IS A MANAGEMENT BUY-IN (MBI)?

A management buy-in (MBI) is a complex transaction where an external management team purchases a controlling stake in a business, normally using a mix of own funds and third party finance. For businesses that are not reaching their full potential, a change in management can improve business performance.

However, one drawback of MBIs is that the incoming leadership team have a steep learning curve getting to grips with the new business. A poorly managed MBI can have a long-term negative impact on the business, and the new management team’s relationship with employees.

WHO DO WE WORK WITH?

We work with high quality management teams with demonstrable track records who have been offered, or want to bring about, the purchase of a business. Management teams must be willing and able to provide a meaningful equity investment from personal reserves. The target business will have an Ebitda of £1m+ and potential for further growth. For many of our clients, a management buy-in is their first corporate transaction. We show you the way through the complexity of an MBI.

See our deals and success stories.

MANAGEMENT BUY-INS - HOW BUSINESSES GET IT WRONG

MBIs are notoriously challenging and fraught with risk. A poorly managed MBI can be frustrating and distracting for all parties, it may not happen at all and can have a long-term negative impact on the target business if structured incorrectly.  

Typical mistakes that potential MBI teams frequently make when attempting a buy-in include:

  • Failure to define acquisition criteria that meets strategic goals in advance;
  • An overly bullish assessment of targets and defining criteria ‘on the fly’ to justify opportunities;
  • Taking an unstructured approach to assessing the market thus failing to find the most suitable targets;
  • Unrealistic valuations resulting in failure to secure targets, or worse still overpaying;
  • Inefficient processes resulting in the absorption of significant management time;
  • Deficient due diligence resulting the acquisition of unexpected risks;
  • Failure to put in place ‘proof of funds’ to support offers;
  • Lack of post transaction integration plan to best protect acquired value.

MANAGEMENT BUY-INS – HOW TO DO IT RIGHT

To successfully undertake a management buy-in, your strategy needs to achieve these key objectives:

  1. Set out your acquisition criteria thinking carefully about what best drives your own strategy and plays to your skills and experience;
  2. Take a structured approach to identifying targets that meet those criteria to develop a deal pipeline from which to choose;
  3. Develop a professional approach strategy to deliver the conversations you need with potential sellers;
  4. Have a clear view on valuation and ensure you are able to offer and justify market pricing;
  5. Make sure you have a well-defined process from offer to completion that ensures risks are identified and mitigated;
  6. Ensure you have the appropriate MBI financing in place and are able to offer ‘proof of funds’ to potential sellers early in the process;
  7. Develop a robust post-acquisition integration plan that protects value.

MANAGEMENT BUY-IN ADVISORY SERVICE

By using our management buy-in advisory service, our M&A experts can advise you through the complex MBI deal process giving you confidence in achieving the result you want. We increase the chances of your MBI being successful by delivering vendor and funder confidence so that all complex moving parts of the deal are in hand. This is what our MBI advisory service provides:

Undertaking the search

Using desktop research, our networks and yours, we make sure that we map the available market as completely as is possible. This ensures that you can truly compare any target against what might be available in the future.

Learn more

Arranging MBI finance

Every management buy-in needs to be financed, typically from more than one source. A combination of equity, debt and vendor finance is common. We can help arrange third party finance and ensure it works alongside any form of vendor finance.

Learn more

Valuation and Offer

We help you formulate a valuation and offer that will be attractive to the seller whilst securing the deal at the right price for you. We show you how to structure offers to appropriately share risk between seller and buyer whilst protecting deal value.

Learn more

ADDITIONAL BENEFITS of using shaw & co

Holistic Approach

By instructing us to manage your MBI transaction as well as arranging finance for your deal, you ensure an integrated and coherent approach to your transaction.

Independent evaluation

It is often easy to get caught in ‘deal fever’ and proceed when you shouldn't. Our independent point of view helps keep decisions logical rather than emotional. We are there to support you with those difficult decisions.

Foresight

We have completed numerous MBIs and can guide you around the pitfalls before you get there. Ensuring that the MBI option is right for you and your seller is critical before investing months in a process.

related areas of expertise

FAQS

Do you accept non-UK clients?

No - We work exclusively with UK-based SMEs and small cap PLCs. However, our clients often have international activities and we regularly transact with overseas buyers and investors or arrange overseas acquisitions on behalf of our UK clients.

Learn more
What sort of businesses can you help complete an MBI?

We work with businesses with EBITDA of £1m and above. A business needs to be profitable with good visibility of cash flow to support the finance structure of the MBI. It is possible to complete MBIs on smaller businesses, but we are unable to advise.

Learn more
How do you get paid?

When supporting mergers and acquisitions (including MBIs and MBOs) our fees are based on time at our prevailing rate cards. We do not work contingently when buying a business.

Learn more
Do you act contingently?

No, we do not act contingently when buying a business. We believe that continent fee arrangements when supporting the acquisition of a business lead to a conflict of interest between advisor and client.

Learn more
Are you sector specialists?

We have specific sector knowledge derived from many years of collective deal making experience. However, we pride ourselves on the diversity of sectors we work with which challenges us to think creatively. This creative and challenging approach brings huge value to our clients when helping them to build robust business cases.

Learn more
When Shaw & Co is involved, will I lose control over the process?

Certainly not! Our aim is to become part of your extended team keeping you up to date with all developments. All decisions are yours to make. Our aim is to make those decisions easier.

Learn more
What sort of service experience can I expect if I instruct Shaw & Co?

We take all of our clients through a carefully crafted journey. Firstly, to ensure that we are a great match for each other and once engaged, to ensure we deliver exceptional client service that exceeds expectations.

Learn more
How long does a management buy-in (MBI) process take to complete?

The most uncertain period is identifying a target and negotiating initial terms, quite often your target is not ready to sell and it can take months or years until they are. But once negotiations start and sufficient information is in hand to start the process of raising finance, a period of 6 to 9 months is common depending on how well prepared for the target is for the process.

Learn more
How much funding can you help me raise for a management buy-in (MBI)?

The amount of funding that can be raised is complex and depends on a number of factors. This includes the amount of equity the MBI team are committing. It is not unusual for this to be in the region of 20% of the purchase price or amount borrowed. Other factors include the level of sustainable profits in the target business to service any debt or the willingness of an MBI team and a Private Equity investor to partner on the acquisition.

Learn more
If the management buy-in (MBI) fails at the last minute, do I still pay Shaw & Co’s fees?

All fees for acquisition work are charged on a per hour basis and are not contingent on the deal happening. That means that yes, you will be required to pay our MBI advisory fees if the deal does not happen. This structure ensures we remain aligned with your interests. The best advice that we might be able to give you is not to proceed if new information is discovered at the very last minute. Success Fees relating to raising finance for an MBI are contingent on completion.

Learn more
What are the advantages and disadvantages of raising debt to finance a management buy-in (MBI)?

Debt is often preferred by MBI teams as the terms of a debt facility are simpler than an equity investment. When the debt is paid off the MBI team own the business without having to contemplate a further transaction. However, the amount of debt that can be raised limited to a proportion of business value and therefore using debt alone will limit the price an MBI team can pay for a business as any gap will need to be filled by management equity or vendor deferral. Debt can also put cash flow pressures on a business and this needs to be carefully considered.

Learn more
What are the advantages and disadvantages of raising equity to finance a management buy-in (MBI)?

An equity partner can bring a more flexible funding package to your MBI, and a partner to help you develop and grow the business. However, this also adds a complex further dimension to your transaction and the business post deal that may not be welcome. Certain MBIs lend themselves to raising equity, particularly where the MBI team have a pre-existing relationship with the equity partner from a previous deal for example.

Learn more

LEARN MORE ABOUT SHAW & CO

Why Shaw & Co

WE MAKE DEALS HAPPEN

Our highly talented people are creative, innovative and thrive when faced with a deal-making challenge. It's no surprise that we make deals happen and turn your ambition into a greater outcome.

Learn more

Fees & charges

COMPLETELY TRANSPARENT & ALIGNed With your GOALs

Our objective is to ensure that our fee more than pays for itself from the value we create for you and your business.

Learn more

We put you first

One of our six promises is to do the right thing and put your interests before ours. We work harder to achieve the best deal for you and your business.

"At every step of the journey, through the build up to our sale, and in the subsequent acquisition by Unilever, Shaw & Co worked with us to protect and champion Pukka’s values and mission. They have helped us find the right home in Unilever, and to create an exciting future for Pukka Herbs."

Tim Westwell, Co-Founder & CEO at Pukka Herbs

HELPFUL RESOURCES

See all resources