Business Valuations
A defensible number for a sale, a share transfer, a divorce, a share scheme or simply to know where you stand, plus the levers that would move it.
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Corporate finance
Management Buyouts
An MBO keeps the business with the people who helped build it. It is often the fairest exit available, and almost always the one with the hardest arithmetic, because the buyers rarely have the money.
Why owners choose an MBO
- The business stays with people who understand it, which matters if you care what happens to your staff and customers
- Confidentiality: no competitors going through your books under an NDA that may not stop them using what they learn
- A lighter, faster process than a competitive sale
- Continuity for customers, and often a smoother handover because the buyers are already running the day to day
The hard part, honestly
Management teams almost never have the cash. That is the defining constraint of every MBO, and it shapes everything else:
- A significant part of the price is usually deferred, paid to you out of the profits the business earns after you have gone
- That leaves you exposed to how well the team runs it without you, which is an uncomfortable position to be in after you have handed over control
- The business takes on debt to fund what the team cannot, so it has to be able to service that debt through a bad year, not just a good one
- Somebody has to decide who is in the team, which is an awkward conversation with real consequences for the people who are not
None of that means an MBO is a bad idea. It means the modelling has to be honest before anyone gets excited.
What we do
Affordability modelling. Integrated forecasts showing what the business can service under a realistic case and a pessimistic one. If the deal only works on the optimistic case, that is worth knowing before you commit.
Deal structure. How much upfront, how much deferred, over what period, on what conditions, and with what security for the seller. Vendor loan notes, earn-outs and staged share transfers all behave differently for tax.
Tax for both outcomes. For the seller, whether Business Asset Disposal Relief is available and how deferred consideration is taxed, including the risk of paying tax on money that has not arrived. For the team, how they fund their equity and what the tax treatment of their shares is, particularly if shares are being acquired at less than market value.
Funding. Preparing the forecasts and business case for lenders, working alongside your bank or broker.
The new company structure. MBOs usually involve a newly formed company acquiring the trading business, and that structure has to be set up correctly from the start.
MBIs, and hybrids
A management buy-in, where an external manager buys in and takes over, raises the same funding questions with an added one: the buyer does not yet know the business, so due diligence matters far more. Hybrids, where an incoming manager joins forces with existing staff, are increasingly common and are usually the most fundable version of the three.
Talk to us confidentially before the idea is raised with the team. Once it has been mentioned, it cannot be unmentioned.
Common questions
How can a management team afford to buy the business?
Rarely out of savings. A typical MBO is funded by a mix of bank debt the business can service, deferred consideration paid to the seller out of future profits, sometimes vendor loan notes, and a modest amount of cash from the team. The key question is not what the team has, it is what the business can safely afford to pay while still operating.
Can you work for the seller and the management team at the same time?
No. The two sides have opposing interests on price and structure, so we work for one and the other side takes their own advice. We should also be clear that our work here is the tax and the numbers: affordability modelling, forecasts and tax computations. Advice on the merits of the buyout itself needs a firm licensed for that.
Is an MBO cheaper than selling to a trade buyer?
The process usually costs less: less marketing, lighter due diligence because the buyers already know the business, and a simpler agreement. But the price is often lower than a strategic trade buyer would pay, and more of it is deferred, which means more risk that some of it never arrives. It is a trade between certainty and value.
What if the buyout does not happen?
This is the risk nobody discusses early enough. Once a team has been told they might own the business, an abandoned MBO is corrosive: expectations have been raised, some people were included and others were not, and confidence takes a long time to recover. We would rather test affordability honestly at the start than discover it after the conversations have been had.
More corporate finance
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The tax structuring, preparation and deal support behind a sale, so the amount that reaches your bank account is as close as possible to the number you agreed.
Learn more →Exit & Succession Planning
The two to five years before you leave, used properly: reliefs protected, the business made saleable, and a plan for who takes it on.
Learn more →Buying a Business
Financial due diligence, affordability modelling and deal structuring, so you find out what you are actually buying before you sign.
Learn more →Raising Finance
Forecasts, business plans and lender packs that stand up to scrutiny, plus a clear-eyed view of what your business can actually afford to borrow.
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What this service is. Tax and accounting work connected with
a transaction: valuations, tax computations and structuring, financial
modelling, due diligence reporting, preparing your records and figures, and
working alongside your solicitor and other advisers. Tax treatment depends on
your circumstances and can change.
What it is not. We do not advise on the merits of buying or
selling shares or other investments, and we do not arrange or broker
investments or finance. Where you need that, we will tell you and you should
take advice from a firm authorised or licensed to give it.