Top tips for successful MBOs
This quick guide gives you some top tips for making your management buy-out
(MBO) a success. They are based on our many years’ experience of great transactions, so if you want to know more, please contact Skye Corporate Finance
Tip tip 1: Do your feasibility
MBOs are a roller coaster ride. Don’t embark on the trip without a clear understanding of where you are likely to end up. Look at the deal, the team and the funding – are the ingredients there to create a success?
Top tip 2: Get the management team right
The true fundamental. It’s a MANAGEMENT buy-out. Get the balance right, get the team that fits the business not the team the text books tell you.
Top tip 3: Protect the equity
This is where the true value lies. Those that get it should really deserve it, those who are critical to the business and its future success. Equity incentives are good – but don’t spread it too thinly.
Top tip 4: Plan well
A good business plan will underpin the MBO. Not just in terms of fund raising but also as a tool to direct and measure the business in the future. Take time to get it right but keep it short, sharp and to the point. Don’t over-elaborate.
Top tip 5: Chose funders carefully
Not just on the basis of terms but also fit and personality. If the relationships not there, neither will be the deal. You’ll have to sell to them but also make them sell to you. You’ve got what they want – opportunity!