Time to swap business for the beach?

It is that time of year when most of us are thinking about taking a week or two out of our busy work schedules for a holiday. Before you know it, it’s been and gone and that feeling of relaxing in the sun is diminished to a memory, until next year anyway.... 

Now could be the time to swap business for the beach!

When thinking about an exit from your business, it is often assumed that this means winding the business down or sell to a trade buyer. What many don’t realise is that a buyer could be sat at the desk right opposite them! The option that can be overlooked is that of a management buyout or an ‘MBO’. 

MBO’s occur when the management team buy a business, or part of a business, which they work for. Not only does this give employees the chance to step up and progress their careers, it could give you chance to take a step back have a phased retirement or exit completely. 

Selling a business can be a lengthy process, from finding and courting a buyer, through due diligence and legal contracts and onto the transitional period. Selling to existing employees can be a smoother and quicker process. The MBO team are already involved and have an in-depth knowledge of the business and how it operates and recognise its strengths and value. As well as a MBO being, generally, a more straightforward process than a trade sale, you will also have peace of mind that your business is being passed on to a team you already know and trust.

Our Corporate Finance team at Armstrong Watson are seeing an increasing number of MBOs this year. The structure and the funding of the deal can be negotiated to suit all parties and with banks currently offering attractive rates on unsecured cashflow lending, now could be the right time for a MBO. The team have seen many MBO success stories and it is, after all, an attractive and accessible route from wage-earner to business owner. 

Written by Darcie Rae
Corporate Finance Executive