Management Buy-In: 4 things that can go wrong

A Management Buy-In can be a great opportunity to start your own business, but it is not as simple as it seems. It is an elaborate process that involves more than you think. Things could go wrong in a Management Buy-In if you don't make the proper preparations. These four points in particular could go wrong.

Funding

Many Management Buy-In candidates underestimate financing. They do not know that a bank expects them to bring 25 to 30 percent of the required amount themselves or wait too long to get the sale amount. Make sure you start exploring financing options early. This will prevent disappointments later on.

The personal relationship in a Management Buy-In can go awry

In a Management Buy-In, the personal relationship is crucial. The business must be given to you by both the owner and the other employees. If you do not have their loyalty, you run the risk that the best people will leave and you will be left with a poorly run business. After all, a business consists largely of the people who work there.

The legal settlement

You may not be an expert in the legal field, nor is your interest in that area, yet it is crucial that the legal side of the Management Buy-In is handled properly. Think of the letter of intent, the confidentiality agreement and the final purchase contract. You can enlist the help of a specialized lawyer in this regard.

The negotiation in a Management Buy-In

You can do the negotiations yourself, but even if you are experienced at it, it is not a good idea. Your relationship with the buyer is more important. It is quite possible that you either don't want to make the most of the deal because you want to keep the relationship good or that your relationship will deteriorate because you go into negotiations too hard. Both cases are unfavorable for your situation. Here, too, a specialized lawyer can help you.