A recent study has shown that increasingly stable market conditions are boosting the number of Management Buy Outs (MBOs) being undertaken by SMEs in the North West.

Research by Beauhurst commissioned by chartered accountants DSG shows the number of MBOs by North West businesses doubled in the first three quarters of last year compared to the same period in the previous year – rising from 11 to 22.

An MBO is the purchase of a company by its existing management team usually with the support of financial backers

This upward shift bucks the national trend. In the rest of the country, MBO numbers have fallen year on year.

There were 118 MBOs in 2013 compared to only 93 in 2014.

Iain White, Corporate Finance partner at DSG, said:

“Challenging economic conditions mean that exit plans have been placed on the back burner over the past few years. But businesses that have survived the turbulence of the financial downturn may now find themselves leaner, more competitive and ready to thrive in markets beginning to show sustained, albeit fragile, signs of confidence and growth.”

“It’s not surprising that many entrepreneurs are now beginning to consider their strategy for realising value from businesses they have spent many years nurturing. Typically MBOs are being led by business owners who are considering retirement.”

“The flexible financing options offered by an MBO are increasingly attractive to entrepreneurs, particularly given the challenges they often face accessing bank debt. In many instances, a successful MBO also provides entrepreneurs with a great way to reward a loyal management team, alongside the reassurance that they are handing over their company to new owners who are both motivated, and sufficiently skilled, to secure its long term future.”

Image