Management Buyouts: Transitioning Ownership with Confidence

Change is never easy. For business owners, the question of how to begin an ownership transition can often prompt tough questions and sleepless nights. Who should take over? How do we keep the business on firm footing in the future?

A management buyout could be the answer to these questions. At Symmetrical, we’ve helped facilitate numerous smooth transitions between a business owner and their management team by creating a seamless M&A process. Here’s what you need to know about management buyouts.

Sell to Someone You Know

A management buyout is not unlike a standard transaction, with one key difference: Instead of selling to an outside company, you’re selling to existing management.

Frequently, a major part of the M&A process involves finding the right buyer, vetting, and making sure the two sides of the transaction share similar company values, business philosophy, and future plans. With a management buyout, this process — while still important — becomes a whole lot easier. Why? Because you already know your managers better than any outsider.

Gain Liquidity and Maintain Involvement

For an owner, a management buyout offers an opportunity to gain liquidity from your business. At the same time, a management buyout is often a great “exit strategy” because it can allow for a slow transition over time. Managers who purchase a company often value the owner’s insight, so it’s common for the owner to stay involved as an advisor. Contrast that with standard transactions, where there’s no guarantee a buyer will want to keep the old guard involved in the company.

Different Structures for Different Goals

Managed buyouts can take a number of different structures, whether it’s a leveraged buyout (where the managers use their savings or take on debt to complete the transaction) or a phased buyout (management receives chunks of equity over time). In addition, there’s a “management buy-in,” in which an external management team takes over the business.

Each type of management buyout has its own pros and cons, depending on what you’re looking to achieve as a business owner. Our team at Symmetrical can work with you to help facilitate the type of sale that best meets your personal goals, as well as those of the business. Get in touch with us today to learn more about management buyouts and how we can help.