Hardheaded approach pays dividends when funding MBOs

Access to a broad range of funding options when planning an MBO will avoid excess leverage, writes Frank Dillon

The importance of sufficient planning for the funding of an MBO cannot be underestimated.

Management buyouts (MBOs) are an attractive way for owners to cash out of a business, especially where they have grown an experienced management team that is capable of taking the company to the next stage of its development.

These deals often take place where there isn’t an obvious trade buyer for the company and there is a strong management team in place who understand the business and are prepared to invest in it. Owners may also have invested themselves very personally, as well as financially, in their businesses and are more comfortable selling their prized possession to people they know.