I was recently interviewed by Michelle Rodger of the Scotland on Sunday about my thoughts and experience of management buy-outs (MBO’s). Over the last decade, I have been involved in both leading and advising on a number of MBO’s and /or management buy-in’s (MBI’s). The most significant of which was the MBO (in 2003) of The RGIT Montrose Group, a leading provider of HSE & specialist training solutions to the international Oil & Gas Industry. One of the questions Michelle asked was, “What are the key success factors for taking the business forward after an MBO?”
I believe that the key success factors for a MBO are largely the same for any other entrepreneurial opportunity. These are:
- a clear vision and deliverable plan.
- belief, passion, drive and determination amongst the MBO Team.
- clear and visible leadership.
- an ability to communicate the vision and compel others to follow.
- having a clear plan but being prepared to shape as you go and /or circumstances dictate.
- being ruthless with costs and “passengers” - cutting deeper and then building back to give yourself a chance at the start.
- rapid and significant improvement of processes, procedures, systems and management information.
- ruthless cash management - "every pound is a prisoner" and “Cash is King"
- pay down loans as quickly as possible to give yourselves head room.
- prepare a 100 day plan and address all the key issues quickly to provide a stable platform for future growth. You need to be ruthless & very focused.
- get complete control of the business. Stir it up and make it clear to all that things have changed and a new regime is in place.
- tighten authorities and develop a new commercial culture where "every pound is seen as a prisoner".
- build the best team around you and ensure that they are totally aligned in every sense!
- execution, execution, execution and a clear focus on the delivery of results.
- develop good relationships with your funding partners ensuring clear, early and open communications.
- get energy and enthusiasm into the whole team and get them behind the MBO team and plan. Make sure they all know what's in it for them!
- constant and consistent communication of progress to all stakeholders.
- lastly be prepared for a lot of hard work, difficult choices, sacrifices and a lot of "blood, sweat & tears".
Murray works with executives, funders and shareholders to recover & create value! You can contact Murray via his website www.murraystrachan.co.uk or follow him on twitter @murraystrachan