From around £10,000 to £500,000+Larger facilities available in suitable cases
Security
Secured or unsecuredOptions compared for your case
Suitable businesses
Sole traders to limited companiesPartnerships and LLPs too
Lender panel
300+ lendersWhole-of-market search
In short
Management buy-in finance pays for an outside manager or team to buy a controlling stake in a company they do not yet run. It is usually a stack: the team's own money, senior debt sized on the target's profits and assets, seller finance and sometimes investor equity. Lenders treat a buy-in as riskier than a buyout, so they focus on the team's record in comparable roles, the quality of the target's earnings and how long the seller stays involved.
This page is for experienced managing directors, finance directors and sales leaders who want to own a business rather than run one for someone else, and for owners weighing an offer from an outside team. A management buy-in (MBI) asks lenders to back people who have not yet sat behind the desk, so the funding case has to answer a question a buyout never faces: how do we know you can run this particular company? Smart Funding Solutions is a broker, not a lender. We present MBI proposals to lenders on our panel of 300+ that fund acquisitions, arranging facilities from around £10,000 to £500,000+, with larger facilities available in suitable cases. For deal funding in general, start with our acquisition finance guide.
Quick enquiry
Prefer a quick call back?
Not ready for the full application? Leave a few details and a broker will call you to talk it through. It is free, with no obligation.
Very few buy-ins are paid for with a single loan. The layers below are combined according to the price, the target's cash generation and its assets.
01
The team's own investment
Funders expect the incoming managers to put in money that would hurt to lose. There is no fixed figure; what matters is that it is significant relative to each person's means. Some buyers release capital from a previous employer's share scheme, a pension lump sum or savings. Borrowing personally to fund the contribution is possible, but lenders will count that borrowing when they look at your personal position.
02
Senior debt
A term loan from a bank or specialist lender forms the backbone of most deals. It is sized on the target's reliable profits after the new team's costs, and it is usually secured with a debenture over the company's assets, often supported by personal guarantees from the incoming directors. Where security is thin, some lenders can use the British Business Bank's Growth Guarantee Scheme, which gives the lender a partial government guarantee; the borrower remains fully liable for the debt.
03
Asset-based lending
If the target has a sizeable debtor book, stock or plant, an asset-based facility can advance against those assets on completion. Invoice finance is common in buy-ins of distribution, manufacturing and services businesses because it funds part of the price and then keeps working capital flowing as the business grows. Machinery the company owns outright can sometimes be refinanced through asset refinancing.
04
Seller finance
Deferring part of the price, either as fixed instalments or as an earn-out linked to results, is especially valuable in a buy-in. It shows lenders that the person who knows the business best is willing to wait for their money, and it keeps the seller motivated through the handover. Our guide to vendor finance and deferred consideration explains how these arrangements are documented and how they rank behind the bank.
05
Mezzanine and investor equity
Where senior debt and the team's money leave a gap, mezzanine finance can sit behind the senior lender at a higher cost, or a private equity investor or family office can take shares. The British Business Bank's guide to private equity explains what investors expect in return, which usually includes board seats, reporting and an exit plan within a few years.
Where MBI deals come from
Most buy-ins start with an owner who has no obvious successor inside the business. The children do not want it, the second tier of management is capable but not ready to buy, and a trade sale would mean the company disappearing into a competitor. An outside team offers the owner a sale on terms that preserve the name and the staff. Other routes include private equity houses that pair an experienced executive with a target they have already identified, business brokers running a sale process, and executives approaching companies in their own sector directly after a career in a larger group.
How you found the deal matters to funders. A negotiated, off-market purchase with a cooperative seller usually produces better information and a longer handover than a competitive auction, and lenders notice the difference.
Due diligence an outside team cannot skip
Insiders carry much of this knowledge in their heads. You have to buy it. Budget for professional diligence and treat it as part of the funding case rather than a cost to minimise.
Financial: monthly management accounts against filed accounts, working capital seasonality, and the true cost of replacing the founder.
Tax: HMRC arrears, Time to Pay arrangements, open enquiries, and the VAT and PAYE record.
Legal: customer and supplier contracts, leases, intellectual property ownership and any litigation.
People: key staff contracts, restrictive covenants and pending disputes. On an asset purchase, employees usually transfer automatically under the TUPE rules on business transfers, together with their existing terms.
Security: existing charges on the Companies House register that must be satisfied at completion.
The share purchase agreement should give you warranties and indemnities backed by the deferred consideration, so there is money to claim against if an undisclosed problem appears.
Risks worth facing before you commit
Personal exposure. Your savings go in first, and guarantees can put personal assets at risk. Read our guide to personal guarantees and consider negotiating a cap.
Overpaying for optimism. Sellers price on their best year. If the deal only works with growth you have not yet delivered, restructure it.
The first year dip. Staff departures and customer caution often follow a change of owner. Forecasts should allow for it.
Too much debt in the stack. Senior debt, deferred consideration and asset finance all compete for the same cash flow.
Alternatives. A BIMBO, a smaller initial stake with an option to buy the rest, or joining as chief executive with an equity incentive before buying can all reduce risk.
Underwriting
What lenders look for in an outside team
01
A relevant record
Evidence you have run a business of similar size, in the same or an adjacent sector, with profit and loss responsibility. CVs should show outcomes rather than job titles.
02
Quality of earnings
Profits that survive scrutiny once the owner's personal costs, one-off items and below-market salary are adjusted for. An independent financial due diligence report carries weight.
03
Dependency on the seller
Whether sales, pricing, supplier terms or technical knowledge sit in the founder's head, and how the handover transfers them.
04
Customer concentration and change of control
Contracts that allow a key customer to walk away when ownership changes are a serious concern.
05
Headroom
Repayments on all debt, including the deferred price, covered comfortably from cash flow after the new team's salaries.
06
A 100-day plan
What you will do first, who you will keep close, and what you will not change until you understand it.
Lenders assess the same evidence differently. Our comparison of business acquisition lenders explains why one may decline a buy-in that another supports.
Checklist
Documents lenders will ask for
Heads of terms and the proposed structure, including any deferred or earn-out element
Three years of the target's filed accounts and the latest management accounts
Aged debtor and creditor reports and a list of the target's existing borrowing
A business plan with monthly cash flow forecasts for at least the first two years under new ownership
CVs for each incoming manager and details of their personal contribution and its source
Personal statements of assets and liabilities for anyone giving a guarantee
Due diligence reports, or their scope and timetable if not yet complete
General information only. Every lender has its own criteria, and all finance is subject to status.
How a buy-in differs from a buyout
In a management buyout, the people buying already run the business. They know which customers are wobbling, which machine is due for replacement and which member of staff holds the supplier relationships together. In a buy-in, all of that has to be learned through due diligence and a handover. The table sets out what changes from a funder's point of view.
Issue
Management buyout
Management buy-in
Knowledge of the business
Complete, from the inside
Limited to what diligence and the seller reveal
Customer and staff reaction
Continuity of familiar faces
New leadership can unsettle both
Lender's first question
Can the business carry the debt?
Can this team run this business, and can it carry the debt?
Typical lender response
Relies more on the existing track record
Wants a larger buyer contribution, a longer seller handover or insiders retained
Warranties
Sellers resist giving them to managers who already know the facts
Full warranty and indemnity protection is expected
A common middle route is the buy-in management buyout (BIMBO): an outside chief executive or finance director joins with one or two existing managers who take equity. Lenders tend to like it because it keeps operational knowledge in the deal while bringing in the skills the business lacks.
Illustration: a buy-in funding stack
Illustration only. The figures are round and hypothetical, and no lender is committed to any structure like this. An experienced sales director and a finance director agree to buy an engineering distributor for £2,000,000 from its retiring founder.
Source
Amount
Why it is there
Incoming team's cash
£200,000
Commitment; first to absorb any loss
Senior term loan
£900,000
Sized on profit after the new team's salaries
Invoice finance on completion
£300,000
Advanced against the existing debtor book
Deferred consideration to the founder
£600,000
Paid over three years, subordinated to the lenders
The founder agrees to stay for twelve months as a consultant. The lender's question is whether the business can meet the term loan repayments and the deferred instalments from cash flow in a flat year, not a record one. If it cannot, the answer is a lower price, a longer deferral or more equity, not more debt.
The broker’s view
How we help an MBI team
We start by testing whether the price and structure are fundable before you spend heavily on diligence. We then prepare a proposal that presents your team's record alongside the target's numbers and approach lenders on our panel that back outside teams, which can include specialist acquisition lenders and asset-based funders. We compare terms, security and guarantee requirements with you, and lenders make every credit decision. It is free to enquire; any broker fee is disclosed separately before you proceed. If you are still deciding whether to borrow at all, our guide on whether to take a loan to buy a business includes a simple stress test.
What our clients say
Simon has raised a large level of funds for me on numerous occasions to assist me in the growth of my business through acquisition. He has never let me down when many others have, and I’m always amazed how he comes up with funding so quickly and efficiently.
Business ownerRepeat client, growth by acquisitionGoogle review
Calculator
Run the numbers first
Illustrative figures from the numbers you enter, before you speak to a lender.
Can I do a management buy-in without experience in the same sector?
It is harder but not ruled out. Lenders will look for transferable experience at a similar scale, and usually want something to offset the gap: an existing manager taking equity, a longer paid handover from the seller, a larger personal or investor contribution, or more of the price deferred.
How much of my own money do I need for an MBI?
There is no set percentage. Funders want a contribution that is meaningful against your personal wealth and that ranks first to absorb losses. A team with modest savings can still be credible if the seller defers a large share of the price and the business has strong assets to lend against.
Is an MBI done as a share purchase or an asset purchase?
Most are share purchases, usually through a new holding company that borrows and buys the target's shares. An asset purchase leaves historic liabilities with the seller but requires contracts, leases and employees to be transferred. Your lawyer and accountant should advise; lenders will lend against either once the structure is clear.
Can the Growth Guarantee Scheme be used for a buy-in?
Acquisition purposes can be eligible, subject to each participating lender's own criteria. The scheme supports the lender rather than the borrower, and personal guarantees may still be requested. See our Growth Guarantee Scheme overview.
Will lenders insist the seller stays on after a management buy-in?
Many lenders will want the seller to stay involved for a handover period after a management buy-in, because the incoming team does not yet know the customers, staff and suppliers. A longer handover, or the seller leaving part of the price in the business, gives lenders comfort that the owner believes the new team can succeed. Our guide to vendor finance and deferred consideration explains how these arrangements are usually set up.
Working capital after an acquisition is funding arranged to start at completion so the acquired business can pay wages and…
Speak to a broker
Discuss your requirement
Tell us what the funding is for. We search our panel of 300+ lenders, structure the case and approach the ones suited to it. No obligation, and free to enquire.
