Budget 2026: what it means for you and your business —
In short
A management buy-out lets you sell to the people who helped build the business — often delivering a fair price, genuine continuity for staff and customers, and a smoother handover than a trade sale. The two questions that decide whether it can happen are whether the team can fund it, and whether the business can service the resulting debt. We model both honestly, before anyone’s expectations are raised.
Almost never by the management team’s own cash alone. Typically a combination of:
Management’s own contribution — modest, but it matters. A team with nothing at stake behaves differently. Bank or asset-based debt, serviced from the business’s future cash flow. Vendor finance / deferred consideration — you, the seller, are paid over time out of profits. This is usually the largest single element, and it means you are, in effect, lending the team the money to buy your business. Private equity, for larger deals.
The test is whether the business can service that debt in a bad year, not a good one. An MBO that only works on the forecast is not an MBO; it is a hostage situation.
Be clear-eyed about this. If a substantial part of your price is deferred, you are exposed to the future performance of a business you no longer control, run by people you have just handed it to.
That exposure is manageable — with security over the shares or assets, a seat on the board, covenants, and a realistic rather than optimistic funding structure. But it must be priced and structured, not hoped away.
A trade sale usually pays more, and pays sooner. An MBO usually delivers more continuity, and often a better outcome for your staff and customers. That is a real trade-off, and only you can make it.
An MBO (buy-out) is a purchase by the existing management team — they know the business, which reduces risk and shortens diligence.
An MBI (buy-in) is a purchase by an external manager or team coming in from outside. It brings fresh capability and often fresh capital, but carries higher execution risk, because the incoming team does not know the business.
A BIMBO combines both — an incoming leader alongside the existing team. Increasingly common, and often the best of both.
INo — and you should be extremely wary of anyone who says they can.
The seller wants the highest price and the most security. The management team wants the lowest price and the least debt. Those interests are directly opposed, and no adviser can serve both honestly.
We act for one side and say clearly, from the outset, which. The other side should take its own advice — and if they don’t, that is itself a risk to the deal completing.
Seller and management team have directly opposing interests on price, structure and security. Any adviser claiming to act for both is serving neither. We will be explicit about who we represent before we start.
We model the debt service in a bad year — not just on the forecast.
One side only — declared up front, so you know whose interests we’re protecting.
Structured security for sellers — deferred consideration protected, not hoped for.
Valuation in-house — an independent number both sides can work from.
Honest about the trade-off — a trade sale usually pays more; an MBO usually preserves more.
This page provides general information about the 2026/27 UK tax year and is not advice on your particular circumstances. Tax and regulatory rules change frequently. Please contact us before acting, or refraining from acting, on anything set out here. LMJ Group is a firm of Chartered Accountants regulated by the ICAEW. LMJ Group is not a registered auditor and does not provide audit services. Last reviewed: July 2026.
