Management Buy-In and Buy-Out

Management buy-in is becoming more popular as a Business Succession and Exit Planning tool for mid-market business owners looking to achieve a successful exit. As part of my Doctoral research (into exactly this topic), I have been looking into the various components that make for a successful implementation of a management buy-in – where key people within the business purchase equity (or a management buy-out – where they purchase the entire business).

An MBI or MBO can achieve several of the key outcomes that most business owners are looking for when they prepare for an exit; ensuring the business continues after they exit and/or retire, ensuring their employees (and customers/suppliers) are looked after and using the sale of their asset (the business) to fund retirement. In many ways, this is an ideal solution for mid-market businesses. Employees who are engaged and have their financial interests aligned with the owner are likely to be more productive and focused on business performance. Reducing the risk of key employees leaving also increases the value of the business (any reduction in risk leads to an increase in business value) and a predetermined sale at an agreed price with an accompanying funding model is attractive.

Over the last 6 months, we have developed a six-month program to implement an MBO ensuring that all of the various aspects are managed. Personal Profile Analysis (we are licensed to use this tool through Thomas International) allows us to identify the interactions between key people, how they communicate and how they might work together (or not), and importantly, how to improve the interactions and communication. Employee Engagement includes a staff survey to determine attitudes towards the business and key issues identified by staff to improve the performance of the business, management succession and corporate governance are also key aspects to maximise the likelihood of success.

Dr Craig West

Founder & Chairman | Succession Plus

Dr Craig West is a strategic accountant who has over 20 years of experience advising business owners.

With a background as an accountant in practice and two master’s degrees, Craig formed a strong view that the majority of business owners (and often their advisers) were unprepared and unaware of the steps required to prepare for exit. He then designed and documented a unique 21-Step Business Succession and Exit Planning process to assist owners and their advisers in navigating this process.

Craig now acts as a strategic business and financial mentor for mid-market business owners. Craig has written four critically acclaimed books educating business owners on employee incentives, succession planning, asset protection, and exit strategies. Additionally, he has completed doctoral research on Employee Share Ownership Plans (ESOPs) for succession.

Craig is a Member of the Forbes Business Council where he leverages his extensive experience to contribute valuable insights on helping business leaders navigate the complexities of growing and exiting their businesses.

In April 2024, the Exit Planning Institute admitted Craig to the International Exit Planning Circle of Excellence.