Starting a business through a business acquisition does not have to mean that you take over a business completely in order to continue to run it as sole shareholder/owner. You can also do business together.
Indeed, a growing number of management buy-in (MBI) transactions nowadays consist of partial takeovers: participations. This may be a minority stake, the acquisition of a majority or a phased acquisition, in which the buyer eventually takes over the entire business from a stake.
No preconceived plan
The number of partial (MBI) acquisitions is therefore increasing compared to complete acquisitions. Yet an orientation and search process for MBI candidates often starts with the desire to take over a business directly and completely. MBIs have usually not been entrepreneurs before and seek autonomy, control and freedom to decide and act in entrepreneurship.
A participation is therefore not always the result of a preconceived plan, but often a 'concurrence of circumstances'. When searching for an MBI candidate, a complete takeover may be the goal, but along the way interesting opportunities regularly come along that result in a partial takeover.
Added value
Ultimately, for an MBI candidate it's about finding the setting where his/her added value as an entrepreneur is shown to its full advantage. We see a growing trend in this:
- Management buy-in as a construction to get good entrepreneurial management on board, that also "participates", has gained much more recognition and trust in the market in recent years.
- The aging of the SME sector has been going on for years. Besides concrete sales (businesses that are for sale), there are also many 'latent sales' (businesses that are not yet for sale); owners who do not have a successor and want to find a solution for this (often in phases).
- Pre-exit; entrepreneurs/DGAs who want to take a step back. Not only to secure part of their retirement, but also out of the desire to work less. A new (co-)entrepreneur can then nicely fill this gap.
- Investors seeking entrepreneurs. Investors are always looking for good, entrepreneurial management for existing participations or new acquisitions. If that type of manager is not present in the business, they must look externally. The MBI candidate with skin in the game is then an attractive option for many investors instead of a salaried manager.
- Entrepreneurs who have reached a ceiling with their businesses and do not have the skills/experience to break through. Or find that it is lonely at the top. Many MBI candidates have an excellent profile with a lot of added value to expand an existing business, which the founder has taken from 0 to 1, to 2 or 3. Again, full acquisition may eventually be the ultimate goal.
The acquisition market has become much more dynamic for MBIs than it was years ago. Whereas in the past many transactions took place in the context of classic business succession - seller sells to successor - the takeover landscape today consists of many different types of transactions, in which the MBI candidate apparently silently finds his place: pre-exit, buy & build and/or private equity.
