Management buy-in (MBI): what is it and when is it interesting?
What is a management buy-in (MBI)?
In an MBI, a company is taken over by a person from outside the organization, often an experienced entrepreneur or manager with knowledge of the industry. This person takes a stake in the company and assumes leadership.
An MBI thus differs from a management buyout (MBO), in which precisely the existing management team takes over the company.
When is an MBI of interest to you as a selling entrepreneur?
An MBI is especially interesting if:
- There is no succession within the company (e.g., family or internal management);
- Your company is too small for Private Equity, which often only steps in at >€1 million EBITDA;
- You are looking for a committed buyer who will continue the company yourself;
- A suitable person is available who brings capital, network and knowledge.
MBI candidates are often driven professionals who are deliberately looking for a company to take over, such as after a career in employment or previous ventures.
What are the benefits of an MBI?
An MBI can provide benefits for both parties:
For the seller:
- Ensuring continuity in a potential succession issue, when there is no internal successor and less PE interest;
- Strong focus and involvement of the buyer, as they invest themselves financially and focus entirely on one company;
- Sometimes more flexibility for custom transfer, such as a phased exit or earn-out structure.
For the buyer:
- Opportunity to become an entrepreneur with an existing, profitable SME (lower risk)
- Not having to build a company from the ground up;
- Lower acquisition price than in PE processes (less competition, lower multiples due to smaller company size)
What should you look for in an MBI?
An MBI is not a standard sale. The process requires proper preparation and guidance:
- Candidate selection
Not every buyer is suitable. Florijnz helps select the right candidate by screening for experience, network, content knowledge, financial strength and motivation. - Structure of the deal
Many MBIs bring in some of their own money and finance the rest through a bank, investor or earn-out structure. - Managing expectations
Clear agreements about transfer, seller involvement and roles are crucial to avoid disappointment. - Culture and click
The personal match is at least as important as the financial side. The buyer's "DNA" must fit the culture of the company the entrepreneur has built.
What can Florijnz do?
Florijnz guides entrepreneurs in finding the right MBI candidate and structuring the acquisition. Thanks to our network of entrepreneurs, investors and managers, we know who is looking for an MBI. We ensure a careful process in which your interests as a seller are paramount.
Are you considering a sale to an outside entrepreneur?
Read more about selling a company or contact us for an initial orientation on an MBI construction.
