Why an MBO?
Often, the best people to take over a business are the ones already in management positions. Members of existing management generally have a personal investment in the business and know it thoroughly, having seen it operate in both good times and bad.
Management buyouts offer benefits across the board, including:
- Smoother transitions
- Improved operational efficiency
- Quick decision making
- Enhanced leadership
- Strategic agility
Existing management simply has more skin in the game than outside buyers. They already feel a sense of pride and ownership. They instinctively know how to handle situations when they arise. This leads to a boost in motivation because they have a concrete, vested interest in the future success of the company.
How MBOs Work: A (Sort-of) Real World Example
Let’s meet Ed. He’s a hard-working guy who has served as the COO of Acme Corp. for 20 years, investing his blood, sweat and tears into the business. Recently, he heard Acme’s owner mention that he was looking to sell.
His interest piqued, Ed talks to the owner about buying the business for a fair price of $20 million. Deal, right? Not quite, because Ed doesn’t actually have $20 million to make the purchase. Not even close.
But Ed gets smart and he calls TKO Miller. He describes the company, his background and the proposed purchase price. TKO Miller introduces Ed to a handful of its proprietary financial partners. These partners are carefully selected because they’re a good fit for the transaction size and they are familiar with the industry.
TKO Miller then works to select the right financial partner for Ed — one that understands his vision and that will help to grow the business while providing the capital to complete the transaction.
In the end, Ed and his new partners purchase the business. It continues to grow and flourish under Ed’s confident direction and years of experience with the company.
TKO Miller + You = A Successful MBO
TKO Miller works with individuals who have a company to purchase and the expertise to run it but simply need to find a financial partner to make it happen. We use the same relationships and techniques used in a sale or recapitalization to make sure that you are partnered with the right financial group. In these transactions, TKO Miller can also invest its own capital alongside the executive, adding credibility and experience to the investor group. Our extensive relationships with private equity give us the ability to match the right financial partner with potential transactions in a variety of industries and business life cycle stages.