The services we provide as part of mergers and acquisitions are broader than simply guiding purchase and sale processes. We guide the process for raising takeover financing and we can help open and set up a digital data room, for instance. We also provide guidance for due diligence processes and the drafting of transaction documentation. Another important arm of our service provision is providing guidance for management buy-in and management buy-out processes, also referred to as MBIs and MBOs.
In a management buy-out, the company or a part of it is acquired by the current management. This could be an alternative to selling the business to a third party, for instance. The advantage is that the manager is already familiar with the business and there is a relationship of trust between the buyer and seller.
It is a big step for a manager to become an owner, however. It is also a vulnerable process for the current owner of the business. What if the MBO negotiations fail? Will the management which wanted to become the owner be as motivated as before to continue to manage the company? And will another buyer still be interested if it knows that the current management would have preferred to take over ownership itself?
In a management buy-in, an external manager buys the company or a part of it. After the acquisition, this manager has control of the company. This form of business acquisition is an alternative to the sale of the business to another company. It is important for the MBI candidate to get a clear profile of the company. It is not only the value that is important, but also the financing possibilities, the legal aspects and the business operations as whole.
A good match between the external manager and the business is crucial for a successful takeover. It is sometimes the case that the manager is not introduced at the company until after the transaction. If the manager is not a good fit for the company and its employees, the acquisition will not be a success. BrightOrange is extra critical when guiding this kind of process, therefore.
An MBO or MBI is a delicate process. During the negotiations, the interests are often directly opposed to each other, while the parties are dependent on each other after the closing of the deal. Maintaining a good relationship between the buyer and seller is important throughout the process, therefore.
It is wise to have an independent expert look things over, to view the matter from a commercial perspective. BrightOrange has the experience and skills to guide this process properly. BrightOrange can act as a neutral intermediary during the negotiations, for instance. This role is one we are familiar with because it has points of connection with financial mediation.
Interested in what we could do for you? Contact us entirely without obligation or schedule a free advice session.