MBI (Management Buy-In)

MBI (Management Buy-In): When External Managers Take Over a Company

A Management Buy-In (MBI) is a specific form of business acquisition in which a company or its shares are purchased by an external management team. Unlike the related concept of a Management Buy-Out, where the existing management takes ownership, the acquiring management in an MBI comes from outside the target company.

Characteristics and Objectives of Management Buy-Ins

A Management Buy-In is typically characterized by the following features:

• External Management Team: The buyers are experienced managers who have not previously worked for the company being acquired. They are often experts from the same or a related industry.

• Assumption of Operational Leadership: The new owners take over not only the company shares but also the operational management of the business. They bring their know-how and experience to further develop the company.

• Partnership with Investors: Frequently, the acquiring managers collaborate with financial investors such as private equity firms or family offices, who provide part of the purchase price and become co-shareholders.

The objectives of a Management Buy-In are diverse. Often, the goal is to unlock previously untapped potential within the target company, introduce new strategic impulses, or further develop the business model. The acquiring managers see an opportunity to leverage their expertise and network profitably and to operate as entrepreneurs.

MBI as a Succession Solution in the Mittelstand

Especially for medium-sized companies, particularly owner-managed family businesses, a Management Buy-In can represent an attractive succession solution. When the younger generation is unwilling or unable to take over company management, selling to an external management team offers an interesting alternative.

The advantages of an MBI as a succession option are clear:

• Continuity and Independence: Unlike a sale to a (often larger) competitor, an MBI allows the company to maintain its independence and identity. The new management continues operations in the spirit of the previous owner.

• Expertise and Network: The acquiring managers bring valuable expertise and contacts that can provide the company with new momentum and growth opportunities.

• Attractive Sale Price: Due to competition with other interested buyers such as strategic or financial investors, an MBI often achieves an attractive sale price for the existing owner.

Finding Buyers for a Management Buy-In

A central challenge in an MBI is finding suitable buyers—managers who not only fit the company professionally and personally but also have the financial means to complete the acquisition.

One option is specialized platforms like viaductus, which connect business sellers with a broad network of potential private buyers. Especially executives looking to "take the step into entrepreneurship" are searching here for attractive acquisition opportunities.

Professional M&A advisory services can provide valuable support in the buyer search and selection process. Corporate finance experts have the necessary experience and contacts to identify and approach suitable MBI candidates.

The Process of a Management Buy-In

Once a selling entrepreneur has found one or more interested MBI candidates, it is important to carefully structure and manage the acquisition process. Key steps include:

• Signing a confidentiality agreement (NDA) with potential buyers
• Providing detailed company information as part of due diligence
• Negotiating purchase price and contract terms
• Preparing and signing the final transaction documentation
• Closing the transaction and transferring ownership and management

Particular attention must be paid to contract drafting, including guarantees and warranties, liability provisions, non-compete clauses, and purchase price adjustment mechanisms.

The article "Checklist for Management Buy-In: How to Prepare for the Business Acquisition" offers a detailed overview of the individual steps and challenges of an MBI from the buyer’s perspective.

In summary, the Management Buy-In is an exciting acquisition variant that is gaining importance, especially in the Mittelstand. For existing owners seeking an external succession solution, the MBI model opens new possibilities for a successful business sale. For ambitious managers, it offers the chance to take the step into entrepreneurship and further develop an established company with fresh ideas.