Buy-In Management Buyout (BIMBO)
A Buy-In Management BuyOut (BIMBO) is a form of a leveraged buyout (LBO) that incorporates characteristics of both a management buyout (MBO) along with a management buy-in (MBI). A buy-in management buyout (BIMBO) occurs when an outside management team joins a company (buying-in) while also buying out the existing management team. A management buy-in is a corporate action in which an outside manager or management team purchases a controlling ownership stake in an outside company and replaces its existing management team. Like all LBOs, there are still risks of disruption, conflicts, and reduced performance - but these may be minimized as the new managers have bought in as owners as well. Buy-In Management Buyout (BIMBO) is a term that originated in Europe to describe a type of LBO that combines new external management with internal management to refresh the direction of the company and streamline operations. This management buyout is complemented with management buy-in, which results in the influx of leaders with expertise to fill in areas of need, be it in a new product or service under development, marketing, operations management, or finance.
What Is Buy-In Management Buyout (BIMBO)?
A Buy-In Management BuyOut (BIMBO) is a form of a leveraged buyout (LBO) that incorporates characteristics of both a management buyout (MBO) along with a management buy-in (MBI).
A BIMBO occurs when existing management along with outside managers decide to buy out a company. The existing management represents the buyout portion while the outside managers represent the buy-in portion.
Understanding Buy-In Management Buyout (BIMBO)
Buy-In Management Buyout (BIMBO) is a term that originated in Europe to describe a type of LBO that combines new external management with internal management to refresh the direction of the company and streamline operations. A leveraged buyout is the acquisition of a company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for these loans, along with the assets of the acquiring company.
This option provides advantages of buy-in and buyout. The transfer will be made much more efficiently and without disruption, because the existing members of management are already familiar with the business. This management buyout is complemented with management buy-in, which results in the influx of leaders with expertise to fill in areas of need, be it in a new product or service under development, marketing, operations management, or finance.
A management buy-in is a corporate action in which an outside manager or management team purchases a controlling ownership stake in an outside company and replaces its existing management team. A management buyout is a transaction where a company’s existing management team purchases the assets and operations of the business they manage.
Taking Care of a Buy-In Management Buyout
New and existing managers must get along for the BIMBO to work. Energized new managers may have novel ideas that they wish to implement right away, while existing managers may fall into a turf-protection mode. Employees may take sides. Conflicts are inevitable, as they are in all organizations, but if they become too pronounced or distracting the business may not run as envisioned before the transaction took place.
An LBO involves an increase of debt on the balance sheet that must be managed responsibly by the management team. The risk is that debt service may not be handled smoothly, causing some financial stress in the new company. However, since each of the managers is now an owner of the company, each has every incentive to behave like owners, which means making rational decisions to increase the odds of success.
Related terms:
Accounting
Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business to oversight agencies, regulators, and the IRS. read more
Collateral , Types, & Examples
Collateral is an asset that a lender accepts as security for extending a loan. If the borrower defaults, then the lender may seize the collateral. read more
Corporate Action
A corporate action is any event, usually approved by the firm's board of directors, that brings material change to a company and affects its stakeholders. read more
Cost of Acquisition
The cost of acquisition is the business expense related to acquiring a new customer or making a major purchase. read more
Institutional Buyout (IBO)
An institutional buyout is the acquisition of a controlling interest in a company by an institutional investor. read more
Leveraged Buyout (LBO)
A leveraged buyout is the acquisition of another company using a significant amount of borrowed money (debt) to meet the cost of acquisition. read more
Leveraged Recapitalization
Leveraged recapitalizations replace most of a company's equity with debt, often as a takeover defense. They consists of both senior bank debt and subordinated debt. read more
Management Buy-In (MBI)
A management buy-in takes place when an outside manager team purchases an ownership stake in an outside company while keeping the existing management team. read more
Management Buyout (MBO)
A management buyout (MBO) is a transaction where a company’s management team purchases the assets and operations of the business they manage. read more
Management and Employee Buyout (MEBO)
A management and employee buyout (MEBO) is a restructuring initiative designed to concentrate ownership into a small group. read more