Criteria for the ideal management buy in scenario
There are a number of factors which, if present, make a good case for a management buyin to be a serious possibility. These are as follows:
- A willing seller and a willing buyer (it goes without saying)
- A retirement sale
- A paternalistic owner/seller
- A business which has been for sale for a number of months and has typically exhausted the idea of a trade sale
- A strong balance sheet
- A track record of solid or growing profits
- Positive cash generation
- A solid and defensible market position, based on product, longevity, intellectual property, long term contracts with customers, etc
- The opportunity to bring professional sales and marketing to bear on the business to help future growth
If all of the above are present, then there is a really good chance of a successful result.