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.