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Key Considerations for MBOs


Key Considerations when Completing an MBO:

  • Is the current owner willing to sell on reasonable terms and conditions
  • Is the price reasonable?
  • Is this the right time to negotiate a purchase?
  • Do you have the necessary skills to complete such an undertaking?
  • Do you have a leader that is passionate about the business and its prospects under new ownership?
  • Are you prepared to make a significant equity contribution towards the purchase price?
  • Can you develop a realistic business plan demonstrating the potential for the continual growth of the business?
  • Will other sources of financing be available to complete the purchase such as bank lines of credit, term and subordinated debt and vendor notes?
  • What will be the reaction to the ownership change by the other stakeholders (customers, suppliers and employees)?
  • What, if anything, will be lost by being detached from the current ownership group?

What do you need to be successful?

  • A strong understanding of many aspects of the business world: accounting, marketing, general business structure, etc.
  • A viable business. The company should currently be cash flow positive with the potential for substantial growth.
  • A willing vendor with reasonable expectations for the selling price and payment terms.
  • A strong management team with a clear vision for the future.

Key Considerations