Management Buy Out
Management wants to continue running the company
A management buyout occurs when the owner wishes to sell the firm to management.
In this scenario:
- The owner would sell some or all of their shares to the employees,
- The owner would take a significant chunk of money off the table (tax deferred indefinitely),
- The management would now run the company
To fund this sale:
- The company will get a non-recourse loan from a bank
- If the lenders won’t give a loan for the full amount,
- The owner will take back seller notes (an IOU to the ESOP).
- The owner and/or management may also allow MBO to invest in the deal.
- The majority owner, and possibly MBO, will receive warrants in return for receiving a low interest rate.
- The owner will sell these warrants to the management team.
Case Study
Take a few minutes to look at a management buyout case study.
Contact Us
Contact us if you have any questions.
We’re easy to reach and always happy to help
We invite you to call us with any questions you have or email us by filling out the form below. No question is too big or too small – whether you have a question about MBO Ventures or a question about ESOPs.
dgleeman@mboventures.com
Partner Phone: (646) 734-2035
40 Fulton Street, 17th floor
New York, NY 10038