The process of a management buyout typically involves several key steps. First, the management team must identify the specific assets and liabilities that it wishes to acquire and negotiate a purchase price with the current owner or owners. This process often involves the use of financial advisors, funders, lawyers, and other professionals to ensure that the terms of the transaction are fair and reasonable.
Once the purchase price has been agreed upon, the management team will typically need to secure financing to fund the acquisition. This can be done through a variety of sources, including personal funds, bank loans, private equity investment, or a combination of multiple sources. There is often a deferred consideration element. It is important for the management team to carefully consider the terms and conditions of any financing they secure, as these can have a significant impact on the long-term success of the MBO.