However, recently there appears to have been a shift in the funding landscape with MBIs starting to appear more and more on the M&A horizon. This can be seen in the advent of dedicated MBI products such as that recently launched by Caple, a specialist Small and Medium Enterprise (SME) lender, and the rise of a number of family office or small Private Equity (PE) type buyers that are likely to be more hands on in terms of running the target company when compared to traditional PE houses.
An MBI can often be an ideal solution for business owners looking to exit; particularly SMEs that may not be of interest to trade buyers, are too small for the larger PE houses and do not have a management team or family members in place to take over when the owner is gone.
That is not to say that MBIs do not come with some risks. Obviously bringing someone in from outside the company who is not a larger trade organisation can incur difficulties in finding finance, difficulties with staff and the maintenance of the culture of the target business. MBIs may also require a bit more of an open mind as to the structure of any potential deal and the length of time the seller may need to stay in the business post acquisition.
Nevertheless, MBIs can be a useful solution when looking at the options of how to successfully plan an exit strategy from your business and should not be discounted.
The next step
For more information, get in touch with Andrew Hancock at a.hancock@uhy-uk.com, via 0161 236 6936 or contact your usual UHY adviser.
