Mbo Mbi

Business ownership transitioning can be a strategic decision that any company can make.  From the existing team seeking full control to investors looking for business acquisition, having the right finance strategy in place is critical.

Management Buyout (MBO) and Management Buy-In (MBI) are tailored funding solutions that support management buy-outs and buy-ins.

AWS Private Finance is a specialist in supporting modern businesses with bespoke financing solutions to help management and buyers unlock capital for ownership transitions.

What Is MBO & MBI Finance?

MBO & MBI is a specific type of business funding solution that supports two types of ownership transitions:

• Management Buy-Out (MBO) – A business funding solution to support the current management team to purchase the business they run.

• Management Buy-In (MBI) – A suitable funding solution when an external management team aims to acquire a business and bring in their own leadership team.

Since both of these transactions can be complex and involve unique challenges, a professional mortgage broker can be helpful to understanding the corporate finance, lender expectations and valuation methodology.

Types of MBO & MBI Finance Available

For modern business transitions, tailored funding solutions may be required. The lenders may assess your application thoroughly before suggesting the most effective funding structures. Common funding options include:

• Senior Debt – this type of funding is secured with company assets and often represents the core of an acquisition finance package. They’re the most affordable choice due to lower interest rates.

• Mezzanine Finance – This is another common type of MBO and MBI finance, which provides additional capital without diluting ownership significantly.

• Equity Finance – Also known as co-investment, Equity finance involves bringing in partners who will handle the business ownership in exchange for capital.

• Vendor Finance – This type of funding can be appropriate when the vendor or seller agrees to finance part of the transaction. Vendor finance makes deals more attractive and flexible.

• Asset-Based Lending – This allows securing funding against specific assets such as receivables, stock or property.

What Lenders Consider For MBO MBI Finance Applications

• Past business financial performance

• Strengths and experience of the management

• Quality and value of assets

• Market position of the business

• Competitive landscape

• Cash flow projections and repayment capacity

A strong application is often the one with a clear strategy, risks and repayment plans. Contact AWS Finance to discuss how we can support your MBO or MBI aspirations.