Considering Minority Ownership with MBO Potential: Seeking Advice

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by a searcher from IESE Business School
in Dublin, Ireland

1yr ago

Considering Minority Ownership with MBO Potential: Seeking Advice

Hi Searchfunder Community,

I’m currently in discussions with two companies, both of which are open to the possibility of a buyer acquiring a minority share initially, with a plan for a full MBO over time, should an agreement for 100% acquisition not materialize at this moment.

Key Details:

Both owners are largely disengaged from daily operations and seek to install a General Manager immediately. They envision a phased transition, with the potential for a full buyout at some point in the future. While I’m aware of the risks associated with starting as a minority owner, I also see opportunities, especially if structured correctly.

Questions for the group:

Do any of you have experience structuring such deals? (I am based in Ireland) How have you navigated control and decision-making as a minority shareholder? What mechanisms (e.g., shareholder agreements, veto rights, earn-outs) have you used to protect your interests while positioning for a complete acquisition down the line? Your insights would be greatly appreciated!

Thanks in advance.

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reply by a searcher 1yr ago
from Loughborough University in London, UK

Hey Stephen, very familiar with this type of deal and happy to share some insights.
Many things to consider, one in particular is whether you want to integrate this within a group or not, as there are particular must-haves if you wanted to roll this into consolidated accounts.
Feel free to drop me a message.

reply by a searcher 1yr ago
from Drake University in Des Moines, IA, USA

I would also think about putting a legal timeline on this. There is a large risk to you that you get in the operator chair, create a ton of value for the company, and now have a disengaged owner with a much more valuable asset than before collecting a big paycheck that is all of a sudden not incentivized to sell. Protect yourself, your time, and your value.