How To Prepare Your Business And Team For An MBO
A management buyout is the process for your management team to buy the business from the business owner. It is a smooth transaction and can reassure business owners, employees, and their target audience that the company will be left in capable hands. MBO’s ensure quality service and company standards and values continue. As this is an internal process, owners need to help prepare their businesses and employees before exiting the business.
Share Your Knowledge
A major part of helping your team be ready for an MBO is making sure that they know everything you do. Your management team might know how to lead the business, but they may not be ready to run your company as an owner. You need to be open about all the tips and tricks about being in charge and give the management team the essential knowledge necessary that your business survives the exit.
You have worked hard to build a business and will have learnt a lot on your journey. You need to tell your people about your experience to prepare them for what’s next.
Make Yourself Redundant
This one may sound a little strange but it’s true. To help make a smoother transaction and allow your management team to really feel like they are in charge, you need to remove yourself completely from the business. Reduce your contact time with clients, customers, partners, and suppliers.
Remove yourself from any key transaction and as you are preparing for your exit give your team the responsibility to make important decisions. This will help ease your customers into the change and will also increase the confidence of your team.
Ensure All Essential Information Is Kept In-House
With a management buyout, your business is at risk of insider trading, however, in preparing for their exit, a business owner can help ensure that only the essential people know the key information. Preventing the knowledge of your exit spreading will help stop competitors taking advantage of the process and avoids any possible difficulties for the business.
Furthermore, keeping all information confidential and in-house helps to secure confidence with your clients and suppliers. You must make sure that all your books are organised and all sensitive information is secured and not divulged outside of the business.
MBO’s can be a faster, smoother transaction than your other exit options but you have to dedicate the time to developing your exit strategy.
To learn more about exit planning and what other options may be available to your business, read our Exit Planning page.
