Management Buy-In and Buy-Out - Succession Plus

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Management Buy-In and Buy-Out


Management Buy-In and Buy-Out

By , July 12, 2017
employee share plan

Management buy-in is becoming more popular as a Business Succession and Exit Planning tool for mid-market business owners looking to achieve a successful exit. As part of my Doctoral research (into exactly this topic), I have been looking into the various components that make for a successful implementation of a management buy-in – where key people within the business purchase equity (or a management buy-out – where they purchase the entire business).

An MBI or MBO can achieve several of the key outcomes that most business owners are looking for when they prepare for an exit; ensuring the business continues after they exit and/or retire, ensuring their employees (and customers/suppliers) are looked after and using the sale of their asset (the business) to fund retirement. In many ways, this is an ideal solution for mid-market businesses. Employees who are engaged and have their financial interests aligned with the owner are likely to be more productive and focused on business performance. Reducing the risk of key employees leaving also increases the value of the business (any reduction in risk leads to an increase in business value) and a predetermined sale at an agreed price with an accompanying funding model is attractive.

Over the last 6 months, we have developed a six-month program to implement an MBO ensuring that all of the various aspects are managed. Personal Profile Analysis (we are licensed to use this tool through Thomas International) allows us to identify the interactions between key people, how they communicate and how they might work together (or not), and importantly, how to improve the interactions and communication. Employee Engagement includes a staff survey to determine attitudes towards the business and key issues identified by staff to improve the performance of the business, management succession and corporate governance are also key aspects to maximise the likelihood of success.

To find out more, join one of our half day workshops.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.

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