All of the characteristics of a traditional MBO apply to a company that is seeking to exit through an MBI with one very important exception: where there is no one suitable for the role of CEO, or other key management function within the business, the investors will insist that outside expertise be brought in to cover this deficiency before they will give the buy-out their financial support.
When planning for a management buy-out you should always be alert to possible management shortcomings. Where you recognise that your management is weak in some area, you will need to put someone else in place. If this is not possible, you need to accept that the VC investors will insist on bringing in a recognised industry expert as a part of the team.
This could completely change the dynamics of the buy-out team and your ability to negotiate the most favourable deal.
