Management Buyout (MBO)

Last updated: 13/05/2025

Management Buyouts (MBOs) for UK Businesses

A Management Buyout (MBO) allows business owners to sell all or part of their company to the current management team, giving them the opportunity to take control of the business. MBOs are a popular option for business owners looking to exit their company while ensuring its continued success, as the management team is already familiar with the operations and long-term goals of the business.

What is a Management Buyout (MBO)?

 An MBO is a transaction in which the management team of a business purchases the company from its current owners. This can be a full or partial buyout, depending on the structure of the deal. MBOs can be funded through bank loans and private equity funding. An MBO is a viable exit strategy for business owners who are looking to step away from day-to-day operations while leaving the company in capable hands.

MBOs typically require careful planning and the structuring of financing options, as the management team will need to raise the necessary funds to purchase the business

Benefits of a Management Buyout

Some of the benefits of an MBO include:

• Quick process
• Exit strategy for business owners
• Greater control for the management team
• Potential for better terms

How does a Management Buyout work?

Once you contact us, you will need to provide us with detailed financial documents, including the company’s latest accounts, projections, and a valuation of the business. In an MBO, an independent valuation is crucial, as it helps establish the purchase price.

Our team will work with you to explore different financing options, including debt financing or equity funding. This stage is crucial, as we aim to secure the right structure that works for both the management team and the current owner.

Once the funding is secured and all terms are agreed upon, we will help you with the final steps. This includes preparing the necessary documentation for signatures and completing due diligence checks before the sale is finalised. The funds are then transferred, and the management team takes control of the business.

Things to consider for a Management Buyout

Funding: MBOs usually require a combination of debt and equity financing. The amount of external funding you can secure will depend on the business’s value and financial health.

Valuation: An independent business valuation is essential for setting a fair price for the business.

Purpose: Can be used for any viable business purpose

What can an management buyout be used for?

Business ownership transfer: The primary purpose of an MBO is to facilitate the transfer of ownership from the current owner to the management team.

Strategic growth: Management may wish to use the MBO as a way to implement their own growth strategy.

Retention of key staff: By making key managers shareholders, you can incentivise and retain top talent.

Alternative solutions to a management buyout (MBO)

Secured business loan: Provides businesses the opportunity to secure funding through using an asset such as property as collateral to secure the funding.

Unsecured business loan: An unsecured loan is ideal for businesses who want a quick access to funding, without having to put down any collateral, with the borrower’s creditworthiness used to determine the loan approval.

How to apply for a management buyout (MBO)

MAF Finance Group works with a wide panel of banks and alternative funders to assess which one provides the solutions that is tailored to your business’ needs.

If you would like to get a quote or require further information, simply fill in the form and we will get in touch with you. If you would like to speak directly to a member of our team, call us on 0115 958 6872. Alternatively, email us at [email protected].