Management Buy-In (MBI)
Definition
A management buy-in (MBI) is an acquisition in which an external management team, usually backed by finance, buys a business and takes over running it. It is the counterpart to a management buyout (MBO), where the existing management team buys the business it already runs; in a buy-in the incoming managers are new to the company. MBIs are attractive to experienced executives who want to own and lead a business rather than start one, and to sellers — often retiring owners — who need a capable successor as well as a buyer. They carry a particular risk: incoming managers know the sector but not the specific business, so the intangible knowledge held by the departing owner and staff can be lost in the handover, which makes documented processes and a strong transition especially valuable. Hybrid deals, where an external leader joins existing managers, are called a buy-in management buyout (BIMBO).
Complementary Terms
Concepts that frequently appear alongside Management Buy-In (MBI) in practice.
A transaction in which a company's existing management team acquires the business, often with financial backing from private equity or debt providers. MBOs are a common succession and exit route, particularly for founder-led or family-owned businesses.
An acquisition in which a significant proportion of the purchase price is funded by debt, using the target company's assets and cash flows as collateral. LBOs are a common private equity strategy for acquiring mature, cash-generative businesses.
Acquisition finance is the funding an acquirer uses to buy a business. It usually combines several layers into a capital stack: the buyer's own cash or equity; senior bank debt, often secured on the target's assets and cash flows; asset-based lending against receivables, stock or plant; and increasingly IP-backed lending against intangible assets such as patents, software and brands.
A vendor loan note (also called vendor finance or a deferred loan note) is an arrangement in which the seller of a business lends part of the purchase price back to the buyer, to be repaid over time with interest. Instead of receiving the whole price in cash at completion, the seller takes a loan note for a portion of it, which the buyer pays down from the acquired business's cash flow.
Further Reading
How to Buy a Business: Grow by Acquisition
The buy-side hub: finding, diligencing, financing and integrating an acquisition.
Read more →Related FAQ
Management buyout vs management buy-in — what's the difference?
In a management buyout (MBO) the existing team buys the business it already runs; in a management buy-in (MBI) an external team buys it and takes over running it.
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