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Could now be the right time for a Management Buyout (MBO)?

As a result of the COVID-19 pandemic, the past few months have been a time of unprecedented challenges and change for owner-managers. Now though, government aid is drawing to a close, staff are continuing to return from furlough and businesses are slowly reopening their doors.

The disruption the pandemic has caused, has prompted many shareholders who were already considering leaving a business now actively taking the steps to do so. Alongside this, there are many privately owned businesses and corporates who are looking to sell to the incumbent management teams.

Many owner-managers might now be considering whether it could be the right time for an MBO.

What is a MBO?

Simply, an MBO involves the management team of an organisation combining resources to buy all or part of the business they manage from the owner. Usually, the management team takes full control and ownership, using their expertise to grow the company and drive it forward.

Why now might be a good time for an MBO

An MBO can be the exit opportunity that owner-managers are looking for post COVID-19 whilst also providing an exciting opportunity for the management team.

There are less trade acquirers in the market at the moment so we expect to see a rise in MBO activity in the coming months.

What are the advantages of an MBO?

For a company undergoing a change in ownership, the MBO route offers advantages to all involved. It allows for a smooth transition of ownership as the new owners know the company, so the risk of failure going forward is reduced.

Other employees are less likely to be concerned and existing customers and trading partners are reassured it will be “business as usual”.

The internal changes and transfer of responsibilities between the vendors and management remain confidential and any due diligence required by funders is often handled quickly.

If your business is an SME, attracting a trade sale buyer can be a lengthy ordeal even during ‘normal’ times, so selling to a team who already knows business can make the negotiation process much more straightforward and efficient.

How can Cowgills Corporate Finance team help?

Getting good advice when it comes to a management buyout is key as navigating your way through the process can become complex. Cowgills Corporate Finance team deliver a bespoke approach when it comes to MBOs, tailored to suit each individual business to ensure our clients get the most of their MBO.

Don’t just take our word for it though, have a look at our recent transactions covering everything from Technology, Media and Telecoms to Consumer, Healthcare, Industrial and Business Services. Our wealth of experience, sector insight and expert knowledge allows us to give advice to our clients in whatever sector they operate.

For advice get in touch, email enquiries@cowgills.co.uk.

Disclaimer

The information was correct at time of publishing but may now be out of date.

Corporate Finance
Posted by Sam Davies
10th September, 2020
Get in touch with Sam Davies