Management Buy-Out (MBO)
Expert funding solutions for management teams looking to acquire their business.
A Management Buy-Out (MBO) occurs when the existing management team of a company purchases the business from its current owners. This transaction type is one of the most established and well-understood forms of corporate acquisition, and is generally favoured by lenders because the management team already possesses intimate knowledge of the business, its customers, suppliers, and market dynamics.
Aberdeen Corporate Finance has successfully structured and arranged funding for numerous MBO transactions across a wide range of sectors and deal sizes. We manage the entire process \u2014 from initial structuring and business plan preparation through to funder approach, negotiation, and completion.
When Does an MBO Typically Occur?
MBO Funding Structure
Senior Debt
Bank lending secured against the business assets and/or property. Typically provides 50–70% of the total funding requirement at the lowest cost of capital. Repaid from operating cash flows over an agreed term.
Mezzanine Finance
Subordinated debt sitting between senior debt and equity. Higher interest rates than senior debt but avoids equity dilution. Typically provides 10–20% of the total funding requirement with interest often rolled up.
Equity Investment
Personal investment from the management team demonstrates commitment and “skin in the game.” Venture capital or private equity co-investment may be introduced for larger transactions to reduce personal exposure.
Vendor Loan Notes
Deferred consideration where the seller accepts part payment over time. Demonstrates the vendor's confidence in the business and reduces the upfront funding requirement. Typically subordinated to all other debt.
Asset-Based Lending
Revolving facilities secured against trade debtors, stock, and other business assets. Provides working capital post-completion and can form a significant component of the total funding structure.
Earn-Out Structures
Where part of the purchase price is linked to future business performance. Bridges valuation gaps between buyer and seller while protecting the management team against overpaying for the business.
Key Success Factors
Typical MBO Parameters
Deal Size Range
Senior Debt Contribution
Typical Timeline
The MBO Process
Initial Discussion & Feasibility
We discuss the transaction, assess feasibility, and develop an initial funding strategy. We advise on valuation, structure, and the likelihood of securing funding.
Information Memorandum
We prepare a comprehensive information memorandum covering the business, management team, financial projections, and funding requirement — presented to lender and investor standards.
Funder Approach & Terms
We approach selected funders from our network, manage initial discussions, and secure competitive indicative terms from multiple providers.
Due Diligence & Legal
We manage the due diligence process, coordinating between you, the funders, and your professional advisors to ensure smooth progression to completion.
Completion
We coordinate all parties through to completion, ensuring all funding layers are in place and the transaction completes on schedule.
Important Notice: Aberdeen Corporate Finance Limited acts as a commercial finance broker and introducer. MBO transactions involve significant financial commitments. All funding is subject to status, due diligence, and funder criteria. Aberdeen Corporate Finance Limited is not regulated by the FCA and does not provide regulated financial advice.
Planning a Management Buy-Out?
Contact us for a confidential, no-obligation discussion about structuring and funding your MBO.
Discuss Your MBO