MBO: The MBO (Management Buy-out) is where the existing management team of a business agree a deal to purchase said business from the owner.
MBI: A management buy-in (MBI) is the where a management team from outside the company agree a deal to purchase a business from the owner.
BIMBO: A BIMBO is a buy-in management buyout that combines characteristics of both a management buyout and a management buy-in. For example an incumbent management team working with an external candidate to buy the company from the vendor, forming a new management team in the process.
Similarities & Differences between MBIs and MBOs
The main difference between a buy-out and a buy-in is that the management are external to the company and therefore a MBI will usually require more due diligence than a MBO. However, the legal structure of the transaction will typically be the same.
MBO vs MBI vs BIMBO
A BIMBO aims to combine the advantages of an MBI and an MBO. Statistics show that MBI processes often fail more than MBOs. This is why BIMBOs are becoming more and more common. MBOs and BIMBOs have become an increasingly used succession/exit planning strategy for business owners who are either looking to retire, semi-retire or completely move out of the industry they are in. However, for a BIMBO to work, new and existing managers must get along. New managers will likely have new ideas that they wish to implement right away while existing managers may wish to protect their own turf.