Buying your own business through a management buy-in

An MBI is the fastest and least risky route to business success. Ninety percent of businesses acquired through an MBI are still in existence after five years. Moreover: two-thirds of these businesses are doing significantly better than before the acquisition. In addition, an MBI is also very suitable for taking over a business step by step. You do this by acquiring a shareholding in phases that you can gradually expand to 100%. In doing so, you can use your profit share to finance additional shares.

Taking over an existing business is not for everyone. First, you must answer one question honestly: are you suited to entrepreneurship? With admittedly a lot of space and freedom to set your own course, but also with more risks and uncertainty. In addition, it is important that you have the necessary knowledge and experience in marketing & sales, finance and (general) management. And last but not least, do you have your own resources and are you also willing to invest that money? You need to be able to invest at least 150,000 euros to get a serious seat at the table with salespeople and advisers.

Some 15,000 SME businesses are sold each year in the Netherlands. In 25% of the cases this involves a management buy-in, so that's about 3,750 businesses. Those are the official figures. In addition, many thousands of businesses are latently for sale. These are mainly (family) businesses whose owners are older than 55. These entrepreneurs are not in a hurry, but if there is a decent offer and a good personal click with the buyer, they are certainly willing to talk. Especially the latter is important: the price is often not the main issue with these sellers; the business must be given to you in a management buy-in.

Banks currently still finance a maximum of 50% of the acquisition value. That is why acquisition financing usually involves several parties besides the bank: an investment company, informal investors, the government in the form of a guarantee, the selling entrepreneur and, of course, yourself. In terms of your own contribution, you should still assume a minimum of 150,000 euros. Above all, it is about showing commitment as an entrepreneur. Financiers do not want a free ride: if things go badly with the business, you have to feel it yourself.

You can do much yourself, but depending on your own knowledge and experience, it is generally wise to hire an adviser for parts of the process. First, for the valuation of the business. In addition, for the bookkeeping review: are the business information and figures provided by the selling entrepreneur correct? In addition, you need a lawyer to draw up the most important contracts: the purchase agreement and the shareholders' agreement. Prior to that, it is also advisable to have the proposed deal structure checked by a tax expert. It is wise to build up a network at an early stage and put together your own "deal team" of advisers, potential financiers and experience experts.

Hiring advisers involves costs. And good advisers are not cheap. For an accountant, business valuator, tax consultant or lawyer you pay between 150 to 250 euros per hour. And if you have the entire process guided by an acquisition advisor, in addition to their hourly rate you often pay a success fee of 1 - 5% of the transaction value. Depending on the size of the transaction and the number of advisers you engage, you should soon count on an amount between 25,000 - 75,000 euros. So make sure you keep the costs under control. Always ask for a clear quote in advance.