Quick reads
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 with extensive knowledge of day to day 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 retaining the existing owner in an equity capacity
- Existing management not comfortable in stepping up to drive the business
- Existing management risk averse and don’t wish to invest
- Existing management wish to invest but don’t have the money
- Existing management not sufficiently experienced to be backable by a funder
- An MBI will typically give the buyer/investor a larger slice of equity
- An MBI is inherently more difficult to undertake