What are my chances of success in completing a management buy-out?

A management buy-out, more often known as an MBO, is the acquisition of a business from its owner by the incumbent management team.  Financing for the acquisition will generally come from a variety of sources including banks, venture capitalists or private equity houses and even possibly the vendor itself.

Managers will rarely complete more than one MBO in their lifetime.  Whilst there are exceptions to this proposition, if you’re doing it for the first time you are going to need some help and advice.  This assistance can come from different sources ranging from incumbent accountants (although they may be conflicted) through to specialist corporate finance advisors such as Jasper Corporate Finance.

We have put together this self-assessment which takes about 5 minutes to complete.  At the conclusion of the questionnaire you will have a better platform to assess whether you and your business is in moderate, good or excellent shape for an MBO.

1. Have your owners ever discussed a sale of the business to you?
2. Is the ownership structure of your business?
3. Have you discussed the potential for an MBO with?
4. How much are you and other members of the senior management team able to invest approximately?
5. Regarding valuation, do you?
6. Over the last 3 years, how would you rate your financial performance?
7. Do you prepare financial forecasts and budgets?
8. Do you prepare financial accounts?
9. Is your business:
10. What is your market share?
11. How would you assess your market?
12. Which best describes the owners’ recent investment in the business?
13. How would you describe your customer base?
14. How do you regard the labour market surrounding your business?
15. Who holds the key relationships with customers?
16. How would you rate the businesses financial controls and management information systems?
17. Do you have an understanding of what is the cheapest form of finance?
18. Do you know the difference between an MBO and an IBO?
19. Will you be able to compete on valuation with a trade buyer?
20. Have you spoken to a professional advisor about an MBO?

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