A Management Buy In (MBI) is one of the ways you can get a company can take over. Below we explain what a Management Buy In is, how it works exactly, and what the difference is between an MBI and a Management Buy Out (MBO).

What is Management Buy-In?

Definition Management Buy In 

In Management Buy In, an external manager or external management team takes over a company. The buyer has not previously been involved with the business. The new owners then take over the management of the company themselves. This means that managers from outside replace the current management.

How does a Management Buy In work?

With an MBI, the buyer can choose to buy the shares all at once. But it also happens that the shares are sold step by step to the new owner. For example, the old management team does not have to leave in one go, and the new owner does not have to put all the money on the table in one go.

The new owner is usually supported by external financiers. Whether this is necessary depends on the value of the company. In principle, an MBI involves a due diligence investigation. We then look at the financial and legal sides of the company. This way the buyer can be sure that he or she will not be faced with any surprises. 

Difference Management Buy In and Management Buy Out

The terms are similar, but an MBI and an MBO are fundamentally different. In an MBI, a new, external manager buys the company. In the case of an MBO (a member of) the current management wants to take over the company. 

An MBI comes from outside the company, an MBO comes from within the company. They are both forms of business takeover where management makes the purchase, and not, for example, another company. 

We have also written about an MBO, so look for a detailed explanation of Management Buy Out here.