What Is a Management Buy-In?
A management buy-in (MBI) is a corporate action in which an outside manager or management team purchases a controlling ownership stake in an outside company and replaces the existing management team in place. This type of action can occur when a company appears to be undervalued, poorly managed or requiring succession.
Management buy-in is also used in a non-financial sense to refer to situations in which employees of a company want to obtain support from management for an idea or project. When management buys in, they have thrown their support behind an idea, which typically makes moving forward with it much easier for employees.
Understanding Management Buy-In (MBI)
A management buy-in differs from a management buyout (MBO). With an MBO, the target company's existing management purchases the company. MBOs typically require financial resources beyond those of management, such as a bank debt or bonds. If a significant amount of debt financing is required, the deal is described as a leveraged buyout (LBO).