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
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.