Is a management buyout (MBO) better than a management buyin (MBI)?

Is a management buyout (MBO) better than a management buyin (MBI)?

There are many differences between an MBO and an MBI. The key differences are as follows:

• An MBO involves existing team members who have day to day knowledge of operations
• An MBO is seen by funders as less risky
• An MBO might be more likely to get the support of the existing owner
• An MBO might have a greater chance of keeping the owner involved in an equity capacity
• Existing management might not be comfortable in stepping up to drive the business forwards
• Existing management might be risk averse and don’t wish to invest their own capital
• Existing management might wish to invest but don’t have the money to make it happen
• Existing management might be seen by funders as not being senior enough/sufficiently experienced to