I was recently interviewed by Michelle Rodger of the Scotland on Sunday about my thoughts and experiences 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 did I think the benefits of a MBO were over other entrepreneurial opportunities?” My answers to this question were:
- The good thing about an MBO compared to many other entrepreneurial opportunities is the fact that there is an existing business with trade, customers, contracts, resources, IP etc. It's not a standing start!
- You should also know the company / business well including the strengths, weaknesses, opportunities and threats.
- You will know the staff, customers, suppliers, bank and other stakeholders and hopefully they will know you and be prepared to back you!
- You will hopefully know where the skeletons are, where you can make cuts, change things and make improvements.
- A MBO provides continuity to the staff and market.
- An MBO also provides (some of) the Management Team with job security. If your employer sold to an external party the new owners may take the decision to replace management with their own team.
- A MBO provides Management, and potentially some or all of the employees, with an opportunity to own the company they work for, and creates the opportunity for personal capital growth.
A copy of Michelle’s article can be found by clicking the link - When you like the company so much that you buy it
Another of the questions, “What are the key success factors for taking the business forward after an MBO?”, will be covered in a subsequent blog.
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