In addition to the types of buyers we mentioned in a previous article Sale to a strategic buyer or an investment firm As discussed, there are several other types of buyers that can be identified. In this article: the Management Buy-Out (MBO) and Management Buy-In (MBI).
MBO means that the current management buys out the (less active) shareholders and continues to run the business. There is also the scenario in which an employee who has been with the company for many years buys into the business and takes over management. This can involve either a partial or a full sale. In any case, an MBO always involves one or more individuals who are already employed by the company. They are already familiar with the company and are an integral part of its corporate culture.
In an MBI, a candidate from outside the company acquires all or part of the business. They often have considerable experience in the sector in which the company operates.
An MBI can be a valuable way of attracting knowledge and expertise from outside the company. An MBI candidate also often brings with them a network within the sector.
Both forms of sale are valuable for continuing your business without joining forces with a larger strategic partner or an investment firm. This approach also allows you to gradually scale back your responsibilities right up until you retire.