Management buyout
A management buyout sells the business to the people who already run it. The owner gets a buyer who knows the company and keeps the staff and customers. The managers get ownership of something they understand. The obstacle is money: managers rarely have the price in cash, so the deal is financed with bank debt and vendor financing.
What you leave with
The management team owns the business, the owner is paid on terms they can rely on and the company can carry the debt.
Who it is for
- Owners who would rather sell to their team than to a stranger
- Managers or management teams who want to buy the company they run
- Partners where one wants out and the others want to stay
What we deliver
- An independent valuation both sides can accept as the starting point
- A financing structure: management equity, bank debt, vendor take-back and outside capital
- Debt capacity analysis so the business can service the loans and still invest
- Negotiation of price, payment schedule, security and the owner's transition role
- A lender-ready business plan and coordination with lawyers and CPAs on the shareholder agreement
How it runs
01Feasibility
We value the business, test what debt it can carry and whether the team can raise the equity.
02Structure
We design the mix of equity, bank financing and vendor take-back and agree price and terms in principle.
03Financing
We prepare the lender package and business plan and support the team through credit approval.
04Close and transition
We coordinate the legal documents with both sides' lawyers and plan the owner's exit from daily leadership.
Engagement and fees
A Strategy Session at $499 for owners or a Business Acquisition consultation at $399 for managers sets the scope. The valuation is $3,500 flat. Transaction advisory is quoted per deal. Every engagement is scoped after a call and confirmed in writing. See consultations and fees.
Why owners choose a buyout
A third-party sale means disclosure to strangers, months of marketing and a buyer who may change everything. A buyout keeps the sale private, rewards the people who built the company with you and usually involves a shorter transition. The trade-off is price and timing. Managers rarely pay a premium and often need the owner to accept part of the price over several years. For many BC owners that trade is worth it, especially when the alternative buyer would move the business.
Making the financing work
The deal is only as good as the debt service. We start from normalised earnings and subtract what the new owners need to live on and what the business needs to reinvest. What is left sets how much bank debt the company can carry, and the gap between bank debt plus management equity and the price is what the owner is asked to finance. Lenders in BC look at the team's experience, their own money at risk and the owner's willingness to stay involved.
Protecting both sides
The owner is extending credit to buyers whose main asset is the business they are buying, so security, covenants and a defined transition role matter. The managers are taking on personal guarantees for a company whose numbers were produced under someone else, so representations, a working capital peg and a clear handover matter to them. A shareholder agreement among the managers matters most of all, because teams that agree on everything today will not in a few years. Lawyers for each side draft these.
Industries where we run this most
Questions about this service
How much equity does the management team need?
Enough to show the lender and the owner that they have real money at risk. The amount depends on the price, the lender and how much the owner will carry. If the team cannot raise it, we look at a staged buy-in.
Can the owner stay involved after the buyout?
Often they should, for a defined period and role, because the lender and the vendor financing both benefit from a smooth handover. The agreement should state the role, the hours and the end date.
Is a buyout cheaper than a sale to an outsider?
Usually the price is lower and more of it is deferred, but the process is cheaper, faster and private. Whether that trade makes sense depends on what the market would pay.
What if only some managers want to buy?
That is normal. The buying group needs a shareholder agreement that sets out contributions, roles, decisions and what happens if someone leaves. The managers who do not buy need clear employment terms so the company keeps them.
Start with a confidential conversation.
Tell Ali where the business is and what you want to happen next. You leave with a straight read on value, timing and the two or three moves that matter, whether or not we work together.