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An Management Buy-In (MBI) generally takes place when a senior manager or managers decide to invest in a business and take over its operational management at the same time.

Whether you are looking to gain expertise for your Comany and simultaneously realise reward for equity transfer and/or transition out of your business over a period of time, or buy-in to an existing operation as an active participant with part ownership there are a number of challenges where Avantia Corporate Services Advisors can assist you. Many people say that mounting an MBI is much like buying your dream house. If it all comes off you’ll be very happy, but there are many obstacles in the way and it can be a lengthy, drawn-out and stressful process.

MBI´s have become increasingly popular in recent years, driven by the fact that many senior executives get frustrated with the limited number of opportunities for advancement available where they are currently employed. Some will form a consortium of like-minded colleagues and secure financial backing after identifying the right target company whilst others may make individual arrangements with a business owner for an extended transition with increasing equity participation.

To effect a successful MBI you need experience and if you are the acquiring party you need to show you are capable of high achievement. Merely having attained senior management positions is not good enough. Relevant business sector knowledge is important because without it you might struggle to convince a financier that you’re the person for the role.

To mount a successful MBI as an acquirer you need:

1.  Relevant experience at Managing Director level.                                                            2. The proven ability to generate increased profits in a business.                                    3. Relevant business sector experience                                                                                 4. Excellent communication and negotiating skills.                                                              5. Strong financial and analytical skills.                                                                                 6 Some Personal Funding or available convertable equity.                                                7. Sound commercial judgement and vision.                                                                         8. Generally (but not always) aged less than 55 but more than 40.                                9. You need to be persuasive as well with excellent presentation skills so that you can convince sceptical financiers of your ability to achieve results.

Most funding for MBI´s has to come from a combination of the executives themselves and their financial backers. The management team has to put in a meaningful investment, not necessarily a huge one but something that represents a significant commitment.

Avantia Corporate Services Advisors can help you choose the right Venture Capitalist with repayment terms that are not going to cripple the new business. Venture Capitalists will generally be prepared to wait three (3) to seven (7) years to get their return on funds invested back with growth and have a planned exit strategy which could involve ´listing´ on the stock market, sale to another business or sale to a financial/strategic buyer.

There is no perfect MBI transaction – all are a compromise to some extent because they involve finding the ideal candidate and the ideal business. That´s where the experience and expertise of your Avantia Corporate Services Advisor comes in. It can take a long time to put all the different parts of the plan together and we will be with you, whichever side of the glass you are looking through, every step of the way.

If you think that an MBI may be suitable as part of an exit strategy or you are looking for an experienced advisor to guide you through the process of developing an MBI plan call us on 07 3010 9711 to make a time for a no obligation chat about your objectives.