In Canada, a growing number of small to medium-sized enterprise owners are experiencing important decisions regarding the succession of their business. In the next decade, approximately 75% of small and medium-sized business owners will be ready to sell their business.
Almost 50% of business owners plan to sell to buyers unrelated to their family, while another 25% plan to sell to members of their family. Both of which are likely to require a third party source of transition financing.1
A management buyout (MBO) provides business owners with the opportunity to execute an effective business succession plan, while providing key employees with the opportunity to meaningfully participate in the continued success of the business. An MBO is often viewed by customers, suppliers, employees and other stakeholders as a positive progression of the business, as the process attracts knowledgeable capital and strategic partners that can facilitate the process and support growth initiatives. MBO’s are more likely to achieve a successful business succession with an 80% success rate, while inter-family succession has only posted a 32% success rate.2
Provided below are examples of Management Buyout investments within Westcap’s portfolio: