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Business loansLast updated: 14 Oct 2026
Get finance for a management buyout
Management buyout finance
Management buyout finance helps your management team buy the business you already run, using a mix of loans, asset finance, investment and seller finance.
Why get management buyout finance with Capitalise?
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What is management buyout finance?
Management buyout finance is the funding a management team uses to buy all, or a controlling share, of the company they currently run. It's rarely one product. Most buyouts combine the team's own money with borrowing, and often a deferred payment agreed with the seller.
A management buyout (MBO) is when the existing management team acquires a significant ownership stake, or full ownership, from the company's current owners. Those owners could be the founders, other shareholders or a parent company selling off a division. For most UK small and medium sized businesses, an MBO is a way for the owner to exit or retire while the business stays in trusted hands. For a larger company listed on the stock market, it can also be used to take the company private.
How does a management buyout work?
A management buyout follows a clear sequence, though every deal is different and the details depend on the people and business involved.
Because funding has to line up with the legal steps, acquisition finance usually takes four to eight weeks from application to funds being released.
Why use management buyout finance?
Buy the business without funding it all yourself
Borrowing can cover most of the purchase price, so your team's own savings go further. That means you can keep more of the ownership between you, rather than giving a large share to an outside investor.
Repay from the profits of the business you now own
Repayments can be spread over an agreed term and structured around the company's cash flow. The business you're buying helps pay for itself, instead of the full cost landing on the team upfront.
Close the gap between your offer and the asking price
Loans, asset finance and seller finance can all be combined in one deal. Comparing options across our panel of 130+ lenders helps you build a funding package that gets the buyout over the line.
How is a management buyout financed?
A management buyout is usually financed with a blend of the team's own equity and borrowing, with seller finance or mezzanine debt closing any gap. The right mix depends on the health of the business, how much the team can put in and what the current owners will accept.
Funding option | How it works | When it helps |
|---|---|---|
Management team's equity | The team puts in personal savings or investments towards the price. | Lenders and investors expect it, as it shows the team is committed to the business. |
External investors | Private equity, venture capital or angel investors provide equity in return for a share of the business. | Reducing how much the team borrows or puts in personally, in exchange for sharing ownership. |
A secured or unsecured loan, repaid over a set term structured around the business's cash flow. | Bridging the gap between the team's contribution and the full purchase price. | |
Borrowing secured against machinery, vehicles or commercial property, often mixing more than one type of asset. | Asset rich businesses, since security can help lenders make a faster decision. | |
Seller financing | The owners take part of the price later, through deferred payments, a seller loan note or an earn out. | Deals where other finance is limited, or where buyer and seller disagree on value. |
Mezzanine finance | A mix of debt and equity that's repaid after the main lender, so it carries more risk and normally a higher interest rate. | Topping up senior borrowing without bringing in a full equity investor. |
Cash flow and future profits | A staged buyout paid from future profits, or cash flow loans sized on the business's steady income. | Businesses with strong, regular income but few assets to secure against. |
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How much of a management buyout can you fund with debt?
Lenders will typically fund between 70% and 90% of the purchase price for an established, profitable business, with the rest coming from the team's own money, seller finance or an investor. The exact amount varies by lender and by deal.
Lenders size the borrowing on the business's maintainable profit, usually measured as EBITDA, rather than on the price alone. So if the price is high compared with what the business earns, you may need a bigger contribution from the team or the seller.
How much does management buyout finance cost?
The cost depends on the mix of finance you use, the strength of the business and each lender's own pricing. These are the main costs to plan for.
Cost | What it covers |
|---|---|
Interest | Charged on loans and asset finance, with rates set by the lender based on risk, security and term. |
Arrangement fees | A fee some lenders charge to set up the facility, either paid upfront or added to the loan. |
Mezzanine pricing | A higher interest rate than senior debt, and sometimes a small share of the business for the lender. |
Professional fees | Legal, accountancy, valuation and due diligence costs, which are usually higher than on a standard loan. |
Stamp Duty on shares | 0.5% of the price when buying shares worth over £1,000 with a stock transfer form. |
Rates and fees vary between lenders, so the figures you're offered will depend on your deal. Our guide to getting a loan to buy a business compares typical costs by loan type.
What are the advantages and disadvantages of a management buyout?
Advantages
Disadvantages
What's the difference between a management buyout and a management buy in?
In a management buyout, the existing managers buy the business. In a management buy in (MBI), an outside manager or team buys a controlling stake and takes over running it.
Management buyout | Management buy in | |
|---|---|---|
Who buys | The existing management team | An external manager or team |
Knowledge of the business | Detailed, from running it day to day | Built up through due diligence |
How lenders view the risk | Lower, because leadership continues | Higher, because leadership changes |
Handover for staff and customers | Usually smooth | More change to manage |
Some deals combine both, with existing managers joining forces with an outside manager
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What do lenders look for in a management buyout?
Lenders assess both the management team and the business being bought. Having these ready will help your application move faster.
Many lenders will also ask the directors to sign a personal guarantee, meaning they agree to repay the debt personally if the business can't.
How to apply for management buyout finance
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Apply with Capitalise
Tell us about the business, the purchase price and how much your team needs to raise.
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Gather your documents
Your dedicated funding specialist helps you gather your business plan, accounts and heads of terms, then puts your application together and sends it to the most suitable lenders from our panel.
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Receive your funding
If approved and you accept, the lender releases the funds at completion and ownership passes to your management team.
Apply for management buyout finance with Capitalise
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