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What is a management buy-in?

Management buy-in (MBI)

A management buy-in, or MBI, is when outside executives a controlling stake in a business they don't already work for and become the company's new management team. As well as investing their own money in the company they've targeted, they will usually try to secure financial backing from a venture capital firm.

Where have you heard about management buy-ins?

MBIs can occur if a company is underperforming or has a poor management team currently in place. Directors of another company may join forces to try to mount a successful strategy to buy enough company shares to gain control of it.

What you need to know about management buy-ins.

Getting financial backing for an MBI can be a problem. Senior executives need to demonstrate they have solid management experience, relevant sector knowledge and a proven track record in generating profits.

If a buy-in is successful, the existing management team is often replaced with new managers and board of directors. Venture capital firms that have stumped up money for the deal generally won't wait any longer than 3-7 years to get a return on investment, by which time the business can hopefully be sold to another buyer or floated on the stock market.

Find out more about management buy-ins.

Read our definition of management buyout to learn how it differs from management buy-in.

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