Benefits
When planning the next phase of your company’s growth strategy, management buyouts can be an appealing liquidity option for several reasons:
- Owners can be assured that the company will have a dedicated management team
- The due diligence process is likely to be shorter because the buyers have familiarity and working knowledge of the company
- Owners are able to reward management with an equity stake
- Owners can sell a controlling interest in the company without conceding confidential information to external purchasers
Alternatives
When you are determining how to transition the business to the next generation of ownership, and for family-owned businesses where transitioning ownership to a family member isn’t necessarily an option, there are two main alternatives: selling the company to an outside third-party (private equity firm, public market, strategic buyer) or selling the company to employees.