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Management Buy-In and Buy-Out

Succession Planning

Management Buy-In and Buy-Out

By , July 12, 2017
employee share plan

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.

Craig West

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.

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