The recently published BuyInside article headlined "MBI can no longer be ignored as a solution to sales" from the Brookz 500 once again highlights the role MBI candidates play in the sales process today.
It was not even that long ago that a management buy-in was seen by selling advisers in particular as a kind of last resort for their sales files. Terms like "inconvenient," "unpredictable," "tight on resources" and "managers aren't entrepreneurs after all" would often come up.
I think the market and we at BuyInside have now more than proven otherwise in recent years. There are very good entrepreneurs among the managers. So that offers a lot of perspective for directors and shareholders who are nearing the end of their entrepreneurial career.
Let's review the various business sale solutions that MBI candidates in particular can offer:
No successor in your business or in your family? And don't see selling to your competitor? There are many qualified successors (MBI) ready to take over from you and give your business continuity and a future. Your successor (MBI'er) is a different type of buyer than a strategic party or investor and therefore offers other opportunities and possibilities.
The ability to say goodbye in phases. We meet many entrepreneurs who want to say goodbye or distance themselves from the company, but do not yet want to or cannot immediately sell completely. The fact that over the years they have become more manager than entrepreneur against their will also often plays an important role in this decision. Bringing in an MBI who takes over this managerial role and succeeds you in phases gives you the space to say goodbye yourself in phases and, until then, to resume your original (entrepreneurial) role.
Pre-exit, why not cash in on some of your value already and/or in the process do something else besides your current business by bringing in a strong new entrepreneur? This fellow or new entrepreneur will continue to run the company, leaving your hands free and also remain co-owner of your (old) business.
The goal may also be to increase value. As a DGA, you may realize that your business does not yet represent the value it potentially holds (or you need). You want to create value by taking new big steps with your business. Steps that do require other entrepreneurial skills. Getting an MBI'er (co-entrepreneur) with the right qualities and experience on board in order to pursue a joint exit within x period can be a very strong solution for this.
A planned (joint) exit need not be an end goal. A strong MBI candidate can also be brought on board (participation/phased sale) to advance to the next phase together. A phase you are not going to reach on your own and which also requires other entrepreneurial skills and experience. This has proven to be a very successful concept in many of the transactions we have assisted in recent years
Strengthening the management team. You can also bring in an MBI'er to complement the qualities of your management/MT. This often involves participation and a specific role to be filled. We also call this a "functional MBI," which is less common in our clients' ambitions.
Conclusion
In short, think beyond the beaten path when it comes to sales planning. There is a growing number of qualified - and in our case also screened - entrepreneurs ready to succeed you or to advance with you to a new growth phase for your business!
