Publications

VIAMBO: A Strategic Path to Ownership Transition

Steven Tang, Partner, MDN Group

A management buyout can be the best solution for both the buyers and the sellers if everyone is in agreement. At MDN Group, we guide business owners and management teams through complex ownership transitions. One structure we often advise on is the Vendor-Initiated Assisted Management Buyout (VIAMBO), a tailored solution where the business owner (vendor) supports the management team in acquiring the company.

Although the term itself might sound complicated, once broken down into components, the logic of the process becomes very clear. Whether you’re preparing to sell your company or aiming to take control as a management team, this could be a valuable structure to consider.

Gabriel Hansen, an associate and MDN that focuses on buyer relations explains how VIAMBOs are powerful when both sides align. In his view, the vendor’s insight, combined with the management team’s ambition, often creates a win-win deal.

There are multiple reasons why this model could be preferable. For a lot of companies, especially those currently experiencing growth, the management is the key component of the company’s value. With VIAMBO, it is possible to retain that value completely and retain growth while initiating a buyout.

But, what is paramount is stakeholder and shareholder concordance about the sale. Especially for larger operations, there is a questionof  whether current management is interested in a management buyout and in what capacity. This is somewhat easy for smaller operations, but becomes progressively harder at scale and requires an experienced team to assist the transition.

What is a VIAMBO?

A Vendor-Initiated Assisted Management Buyout (VIAMBO) is a specific type of management buyout (MBO) where the current owner takes an active role in helping the company’s existing management team purchase the business.

Rather than a purely third-party acquisition, this structure allows for a collaborative transition. The vendor remains engaged in supporting the deal through guidance, deferred payment terms, or even vendor financing.

For a company where there is a high degree of trust between the owner and the management, it can create a lockstep transition. If conducted properly, such a buyout can not only ensure a good buyout price but also incentivise the management to retain good results. Additionally, as there are no hostile negotiations, there is zero loss in credibility or effectiveness of the company when it comes to clients or suppliers.

Key Advantages

In simple terms, the main benefit of a vendor-initiated buyout is stability. A buyout can be a troublesome period for a company, as stakeholders might doubt the effective continuity of current business practices. With a VIAMBO, this is not the case, and if managed properly, it can even improve effectiveness even before the buyout, as everyone is expecting a good deal.

Some advantages of VIAMBO are:

• Seamless Handover: The vendor’s ongoing support can ensure business continuity. This includes retaining customers, employees, and operational flow.
• Insider Knowledge: The vendor often transfers critical market and operational knowledge, reducing risk for the buyers.
• Flexible Financing: Financing terms are often more favourable than external deals, which may include staged payments or internal loans.
• Stakeholder Confidence: The vendor’s endorsement increases trust among suppliers, customers, and staff.

Risks & Considerations

For a lot of vendors, there is a miscommunication with their management about expectations. While VIAMBO can ensure a good price, there is a question if other stipulations would be acceptable for the buying management.

There are five risks to consider when contemplating VIAMBO:

• Conflict of Interest: Misaligned goals between the vendor and the management team can complicate negotiations and execution.
• Restricted Autonomy: Continued vendor presence may limit the management team’s ability to implement new strategies.
• Vendor Dependency: Over-reliance on the seller can be risky if their involvement ends suddenly.
• Financial Pressure: Debt or obligations linked to the vendor agreement may strain the management team’s cash flow.
• Perception Challenges: Stakeholders may not see the new leadership as fully in control while the vendor remains involved.

Martin Bekker, a partner at MDN Group explains how with the right advisory structure, a VIAMBO can be a low-risk way for teams to become owners. Simultaneously, it would give the sellers the comfort of a phased exit.

Is a VIAMBO Right for You?

A VIAMBO may suit companies where the seller is invested in the future success of the business and believes in the ability of the current management to carry it forward. For the management team, it offers a chance to gain ownership with mentorship and reduced risk.

Objectively, it is an ideal time to sell for owners who have complete faith in the capabilities of their management but can no longer invest time in oversight. They can pass on the torch, so to speak, in the capacity and dynamic with which they are comfortable.

In many ways, it is a compromise solution between a direct buyout and the company going public. In both of those situations, the process itself could damage the performance and value of the company. But when the management team has a vested interest in taking on a bigger capital stake and the owner decides to sell, everyone could win.

Success depends on carefully negotiated terms and a clear understanding of each party’s role, timing, and expectations. At MDN Group, we structure VIAMBOs to balance control, funding, and strategic alignment. These steps are necessary to create a seamless transition.

How MDN Group Can Support You?

Whether you’re planning your business exit strategy or a management team ready to buy, MDN Group provides expert support in deal structuring, valuation, due diligence, and negotiation.

We work with owners to find the right transition path and with management teams to help secure funding and build compelling acquisition proposals. Explore more about our services:

• Strategic Advisory: Assistance with determining priorities and long-term strategic goals
• Capital Raising: Assistance with connecting with investor networks and alternative capital pools
• Full M&A Advisory: Assisting with every single step with active acquisitions and those that are yet to be planned

Our M&A team has helped clients across Europe structure complex VIAMBOs with favourable outcomes for all parties.

To explore whether a VIAMBO is the right move for your company, contact MDN Group and our advisors are ready to guide you every step of the way.