Increasingly entrepreneurs wish to sell their businesses, and often potential buyers are private parties, referred to as management buy-in (MBI) candidates. An MBI can be defined as the acquisition of all or part of a company by managers from outside the venture. Typically the new owners will take over the management of the company, and they often utilise the support of external financiers.

While MBI candidates’ individual motives vary, they tend to centre on financial opportunity or ambitions such as the desire to:

• Develop a commercial enterprise independently
• Become an entrepreneur
• Achieve capital gains

An MBI is not always driven by the personal motives of MBI candidates, however. The process can also be sparked by the company’s own initiatives. From the company’s perspective, an MBI is often seen as a possible solution to challenges such as:

• Lack of a viable succession plan
• Need to intervene drastically via management turnaround
• Growth beyond the capacities of the current management

The MBI process is generally conducted by banks, corporate finance advisers, accountants and private equity investors. The parties involved in an MBI are perfectly capable of managing the business aspects of the process, i.e. financing, due diligence and strategy. What they often lack is the human capital link.

Boyden regards the human capital link as essential to the continued success of the company making the MBI transition. It is of crucial importance to assess whether a potential MBI candidate has the capacity to become a successful entrepreneur and remain so. Further, thorough assessment is needed with regards to whether an MBI candidate can achieve additional growth and keep stakeholders satisfied.

This is why the process of identifying the right MBI candidate is best left in the hands of a party with a long and extensive track record of searching for and placing top candidates in key corporate positions.

Boyden has successfully completed numerous MBI transactions. Our experience and expertise makes us the perfect partner, both for parties on the business side of the sale/purchase process and for aspiring MBI candidates.