Vendor Initiated Management Buy Out
The benefits of a VIMBO are evident; a company owner can initiate the deal on his or her terms and immediately realise cash.
A vendor initiated management buyout (VIMBO) is a virtually identical process to a management buyout (MBO) with one key difference; the vendor (selling company) is the one making the approach to the management team rather than the other way around.
In the current market, mergers and acquisitions (M&A) are not always straight-forward and so a vendor initiated management buyout may prove to be a fruitful alternative for those looking at a business exit strategy.
The benefits of a VIMBO are evident; a company owner can initiate the deal on his or her terms and immediately realise cash. Going forward, their risk in the business in minimised yet the value in it can be crystalised through cash or loan notes that continue to be paid to owner – enabling them to maintain an equity stake. The upshot of which means the vendor can share in any future profits and oversee the succession of the business to the management team.
A vendor initiated buyout can be a sensitive transaction and it's crucial that the vendor fully explores this option before reaching out with an official proposal. They may also want to consider a trade sale or, at the very least, compare the pros and cons of each potential process. We can help in this regard and ascertain the best solution for you going forward. If a VIMBO is appropriate, you would need to ensure the management team are happy to proceed and that the ongoing business operations are not affected in the process. With our experience, we can help throughout and ensure the most efficient and timely outcome for both the vendor and management team.
If you would like advice on a vendor initiated management buyout, you can consult BTG Corporate Finance. We have the experience and expertise to deliver honest and sound advice to our clients who are looking at potential exit strategies.