Considering Minority Ownership with MBO Potential: Seeking Advice

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January 16, 2025

by a searcher from IESE Business School in Dublin, Ireland

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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commentor profile
Reply by a searcher
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.
commentor profile
Reply by a searcher
in Northampton, UK
Shareholders agreement detailing how everyone will work together and a call option to purchase the remaining equity using a pre agreed valuation methodology (e.g. [ ] X EBITDA).
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