Management buy-in (MBI)

Definition

An outsider buying into a company to run it, the buyout with a new face in charge.

Also written management buy in, management buy-ins, MBI.

Why It Matters

The manager who buys in was not in the building, so the diligence risk the buyout escapes is all here: the books, the team and the customers are learned from outside, and the seller is trusting a resume. It is the European name for what this site calls a search, and its investors underwrite the person before the company, which is why the term shows up on backer pages and in continental deal records. A buy-in with the incumbent managers staying and taking a stake is a BIMBO, and the seat and the stake are negotiated together.

In numbers: An operator with fifteen years in logistics buys a $6,000,000 freight forwarder from its retiring founder: 20% equity from investors who back the operator, a seller note for 15%, and a bank loan for the rest, with the founder consulting for a year.