MBO’S - WHY LET YOUR FUTURE BUYERS WALK OUT THE DOOR?

When investigating the sale of their business, clients naturally are interested in our recommendations as to how they can maximise their selling price.

Interestingly, an area we raise that in so many cases is overlooked, are Management Buyouts, commonly referred to as MBO’s.

The main reasons MBO’s are overlooked or not considered by agency owners they do not want the staff to know they’re selling or they don’t believe the staff have the capacity to purchase the business. Not to be a killjoy, but in many cases this perception is wrong on both fronts.

Our industry is built and continues to build on sales staff and property managers leaving an established business to set up their own. Consequently, taking much of the established clientele with them. So why let your future buyers just walk out the door?

When considering staff who may be suitable for your MBO do not restrict your views to just sales people. Ensure all key staff including administration and property management will be given an equal opportunity as their skill sets often make the best business owners.

Unequivocally, some of our most successful clients have structured succession plans that include partial and eventual full sale to their existing staff.

The main benefit and features to business owners of a MBO are:

-             Minimal disruption to the business, staff and clients through the sale process.

-              Seamless transition from outgoing owners to the new owners.

-             There no cultural change or shock to the business.

-             The outgoing owner can provide guidance and leadership over a period of time allowing the new owners to settle in to their new role.

-             MBO’s more often than not achieve a greater sale price as the buyers see the value proposition and will pay a higher price to secure their future returns.

-             Property Management slippage is usually negligible.

-             Subject to meeting credit criteria, banks are usually very supportive of MBO’s

To support our comments, we have consulted on numerous MBO’s ranging in value from $600,000 to $5,000,000. We’re glad to report each of these were a successful transition and their business success continues today.