Management Buy In & Management Buy Out
When buying or selling an online business, there are several ways imaginable in which the transaction can be carried out: Consider a Business Takeover or a Merger. A Business Takeover refers to a 100% takeover of assets-liabilities or shares. A Merger refers to the merger of (usually) two separate entities into one new company.
A Company Takeover can be executed in different ways. On Businessforsale.eu we see many 'strategic company takeovers', but there are more ways. Two of these we will explain to you on this page because we find them relevant and certainly one of these variants we see more and more often.
What is a Management Buy In?
When a manager or managers from outside the company acquire (part of) a company, it is called a Management Buy In. After the acquisition, the new owner/owners take over the management of the company themselves. This type of buyers does not always have enough own resources, so such an acquisition is quite often supported by financing from, for example, investors, bank loans or even crowdfunding.
What is a Management Buy Out?
When an existing shareholder sells his interest in the company to one or more employees (usually members of the MT) it is called a Management Buy Out. This form of transfer is (also) common in family businesses, where the company is transferred to family members who are already working within the company.
Taking over an online business via an MBI or MBO
A Management Buy Out is a method of acquisition that is easier for all parties involved than a Buy In, because the acquiring party has often been involved with the company for years and will know the online business inside out. So unlike the Buy In, the buyer knows exactly what he/she is buying and what the future expectations are. Because of this familiarity with the operation, financing by external parties is usually also somewhat easier to obtain than in the case of the Buy In.
A Management Buy In, on the other hand, is something we see more often. In this type of transfer, the buyer actually always lags behind the seller in terms of knowledge about the company. We therefore advise buyers to proceed very thoroughly, possibly to have the online business well researched for status and potential, and to enter into a solid agreement.
Online business partial takeover
It is of course also possible to perform a partial transfer. We see this quite often with entrepreneurs who have built up their companies themselves to a stage where serious turnover is being achieved and the entrepreneur is expected to have more management skills to keep the online business(s) running and to expand. Via a Management Buy In, a second entrepreneur can step in, bringing a new skillset and perhaps already having gained a lot of management experience with an employer, which he can now contribute.
Businessforsale.eu works with a network of professionals who can provide you with solid support in selling your onlinebusiness/business. Please contact sander.scholten@businessforsale.eu for more information and a quote.