Types of takeovers

There are various reasons why you might wish to take over a business. For example, you may want to grow, strengthen your market position, or enter a new market. Whatever your reason, when undertaking a takeover, it is wise to engage an external party for advice and guidance. It is a complex process involving many factors. For instance, there are several types of takeovers. Together, we will assess what is best for your situation and walk you through the entire process step by step. And at the end? We’ll raise a glass together to a successful deal.

Types of company takeovers

As we have already mentioned, there are several types of company takeovers, such as the management buy-in and management buy-out. We explain them below.

Management buy-in

One type of takeover is the management buy-in (MBI). In a management buy-in, a company is taken over by external management that has not previously been involved with the company in question. The current management is therefore replaced by the new owner(s). This could be a single person or a team of several people. It is often the case that the new management consists of one (or more) former entrepreneurs with an affinity for a particular market. For the current owner, a management buy-in may, for example, be of interest if there is no suitable successor within the company. A disadvantage of this type of takeover is that the new management often does not (yet) have the necessary knowledge of the company and the market. It is therefore important to retain key personnel so that they can pass on their knowledge.

Management buy-out

Another type of takeover is the management buy-out (MBO). In this scenario, the current management acquires (part of) the shares. This type of company takeover is suitable, for example, where there is no successor within the family but there is one within the company. There is often already a good relationship with the management, which means there is greater goodwill than with an external takeover candidate. And unlike with a management buy-in, the current management often already knows the business inside out. Bear in mind, however, that jealousy may arise among the current staff because not all employees are eligible to acquire shares. Therefore, do not forget to pay sufficient attention to the team during the takeover.

Family takeover

In family businesses, it is only natural that the current owner usually wishes to keep the business within the family. The bond between family members is often strong, which means that emotional considerations are more likely to come into play in this type of takeover. It is therefore important to take your time with the takeover, so that everyone feels comfortable with it and continues to do so.

Gradual takeover

The final type of business acquisition is a gradual takeover. There can be several reasons for this type of takeover, such as financial considerations. If, as the buyer, you are not (yet) able to secure the full financing, this is a good option. In addition, the buyer and seller can agree between themselves that the purchase price will be paid in instalments. The seller may also prefer a gradual takeover because they do not wish to step away from the business entirely straight away. Often, certain arrangements are made in advance regarding future timelines. For instance, the acquisition may be carried out in tranches. This gives both the seller and the buyer a longer period for the handover.

Why BrightOrange for business acquisition advice?

At BrightOrange, we have over 25 years’ experience with the types of business acquisitions mentioned. We stand out thanks to our personalised approach. A dedicated deal team is at your disposal for business acquisition advice throughout the entire process. A partner is also always involved. This team will do everything in its power to ensure the acquisition is successfully completed. Furthermore, we place great importance on your privacy. That is why we do not publish any deals, which is unique in our industry. If you would like to know more about our services or the types of takeovers, please do not hesitate to contact us.

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