There’s clearly benefit to selling your business in the current climate, with the value of outward mergers and acquisitions in Q2 2021 equating to some £6 billion in the UK.
This represented a £4.3 billion increase when compared to the previous quarter, with high value acquisitions particularly prevalent in the technology sector.
One common type of acquisition is a manager buyout. But what are the main benefits of this, and how can it be advantageous for your business?
1. Continuity and a Quick Sales Process
Ultimately, virtually every professional service provider or business entity deals with succession planning, in order to create more seamless transitions as the company continues to grow and evolve.
If you do prioritise this type of transition, then a management buyout may be highly appealing.
After all, this type of acquisition sees a business’s management team buy the firm’s existing assets and operations from an incumbent owner, bringing all of their knowledge, insight and expertise to the fore and enabling operations to continue as usual during the transaction process.
This can also translate into a smoother and quick sales process, so long as the valuation is met and both parties enter into good faith negotiations.
2. There’s Greater Confidentiality Involved in the Sale
With external buyouts, people from outside the business look to acquire all commercial assets and operations belonging to a target firm.
The issue with this type of acquisition is that the deals are often relatively high-profile and subject to enormous speculation, while there’s far greater opportunity for confidential business details and information to be split into the public domain.
With a management buyout, however, negotiations tend to be contained in-house, making it far easier for information to remain firmly within the business.
This helps to optimise confidentiality across the board, particularly in comparison with a trade sale in the open market.
3. An MBO Can Help Smaller Vendors That May Struggle to Find a Trade Vendor
If you look at the largest scale external buyouts and acquisitions, you’ll see that they tend to be particularly high in value.
This trend is most evident in the high-growth iGaming marketplace, where large players in the US and UK are continuing to build their portfolios through huge value acquisitions.
Because of this and their typically lower valuations, it can be hard for smaller firms and entities to attract trade buyers externally.
This is why a management buyout is so beneficial to small businesses, who can optimise their resale value and command a fair price by negotiating with key stakeholders who have a vested interest in buying the company.