What Does Buy-In Management Buyout (BIMBO) Mean?
A buy-in management buyout (BIMBO) is a type of transaction that combines the characteristics of a management buy-in and management buyout. Existing management participate in a transaction, but outside experts are also added to the team to provide additional depth.
This type of transaction is ideal for companies that have strong operational management, but lack leadership with the exit of the selling owner. In most cases, the existing management that is buying in has the operational capabilities to run the day-to-day business, but additional leadership is required to drive strategic initiatives and enhance customer relationships in order to create additional value in the business.
Divestopedia Explains Buy-In Management Buyout (BIMBO)
A buy-in management buyout provides us with one of the best acronyms in corporate finance - BIMBO. This type of transaction is sometimes used by private equity firms to bring more sophistication to operationally-focused management teams. It is also initiated by owners that support an MBO, but recognize the need for a leader upon their exit.
The biggest issue with a BIMBO is that the existing management team must accept the new outside experts coming into their team. These experts are usually coming into positions of leadership, and this may cause resentment among other team members. It is important to iron out these issues before a transaction is consummated.
Banking institutions that provide transaction financing usually like a BIMBO because the existing members of management are already familiar with the business, and outside management coming in have the expertise and motivation to make it better. Both existing management and incoming leadership usually have an investment in the company, which aligns their personal objectives with value creation in the company.