Management Buy Out Funding UK
Management Buy Out Funding | Buy Out Shareholders & Take Full Ownership
Buying out a co-shareholder, an exiting director or a retiring business partner is one of the most strategically important deals you'll ever do — and one of the hardest to get a high-street bank to underwrite. We arrange management buy out (MBO) funding from £5k to £500k+ across unsecured, secured, asset-refinance and invoice-finance routes. The right structure depends on who's buying, what they already own, and what's on the company balance sheet — and that's exactly where a specialist broker earns its keep.
Free to apply. Soft credit search at the eligibility stage. We'll model every viable route before recommending one.
Five Realistic Routes To Fund A Management Buy Out
The right structure depends on the buyer's existing ownership stake, what personal security they can offer, and what assets and receivables already sit inside the business. In most live MBO deals we end up blending two of these routes — rarely a single product.
1. Unsecured MBO Loan (PG Only)
The cleanest structure when an existing 50% owner is buying out the other 50% shareholder. Because the buyer already knows the business inside out and will own 100% post-deal, lenders will often write a straight unsecured term loan to the company on a single personal guarantee from the incoming sole owner — no property charge required. Typically 3 to 5 years, fixed monthly payments.
2. Secured Loan Against Property
Where the buyer has equity in commercial, residential or buy-to-let property, a secured loan unlocks the largest facility and the longest term. Lenders typically advance up to 75% LTV with 1st, 2nd, 3rd or equitable charge options available. Best route where the buyout figure is significant relative to the company's free cash flow, or where the deal needs to stretch over 7–10 years to be comfortably serviceable.
3. Asset Refinance
Where the company owns vehicles, plant, machinery or equipment outright, asset refinance releases that equity as a lump sum specifically for the share purchase. The asset stays in use, ownership transfers to the lender for the term of the agreement, and repayments are spread over 3–5 years. Often used to top up an unsecured or secured facility rather than as the sole funding line.
4. Invoice Finance + Bolt-On Loan
For B2B businesses with a strong sales ledger, an invoice finance facility releases working capital on day one and gives the funder ongoing security over future receivables. Many lenders will then bolt a top-up term loan onto the IF facility specifically to fund the share purchase — they're comfortable with the deal because the day-to-day exposure is matched against live, verified invoices.
5. Shorter-Term Loan (Often No PG)
Where the buyer wants to avoid a personal guarantee entirely — for example, where the buyout figure is modest and the business throws off strong monthly cash — a 6 to 18 month short-term facility on the company alone can sometimes be structured without a PG. Useful as a bridge while a longer-term refinance is arranged, or for smaller equity stakes being acquired in stages.
Where It Doesn't Work
It's important to be straight about this: where an entirely external buyer is coming into a business they've never been part of, with no property to offer as security and no existing equity stake, MBO funding rarely lines up. Lenders need either prior involvement in the company or meaningful personal security — ideally both. We'll tell you upfront if we don't see a viable route.
What Lenders Actually Look For In An MBO Deal
Buyer Continuity Is The Single Biggest Factor
A 50/50 director buying out their co-shareholder is a fundamentally different underwrite to a new external party buying in. The first case — existing director taking 100% — is the deal lenders genuinely like: the buyer has years of trading history, intimate knowledge of the customer base, and a clean continuity story. The second case requires significant personal security and usually a meaningful equity contribution from the buyer before any lender will engage. If you're somewhere in between (e.g. minority shareholder buying up to 100%), expect a hybrid structure.
Filed Accounts Decide The Ceiling
Lenders size the unsecured portion of an MBO against EBITDA and free cash flow from the most recent two years of filed accounts at Companies House. As a working rule of thumb, comfortable serviceability on an unsecured 5-year term loan sits around 1.5x to 2x annual EBITDA. If the headline buyout figure exceeds that, the structure will need to draw on property security, asset refinance or an invoice-finance bolt-on to bridge the gap — not because the deal isn't viable, but because no single product is the right shape for the whole sum.
Vendor Deferred Consideration Helps More Than You'd Think
If the exiting shareholder is willing to leave a portion of the consideration in the business — typically 20–40%, repaid over 2–3 years out of trading — lenders treat that very favourably. It signals seller confidence in the ongoing business and reduces the day-one borrowing requirement. We frequently recommend exploring deferred consideration with the outgoing party before sizing the lending request, because it materially expands the range of routes that become viable.
What We'll Need To Quote The Deal
MBO underwriting is faster when the whole picture is on the table from day one. The more of the below we have upfront, the quicker we can return matched indicative offers.
Last 2 Years' Filed Accounts
Plus latest management accounts if the last filing is more than 6 months old. Lenders need to see EBITDA and free cash flow to size the facility.
The Proposed Deal Structure
Who is buying, who is selling, the agreed valuation, and any deferred consideration the outgoing shareholder is open to.
Last 6 Months' Bank Statements
Shared in seconds via Open Banking. Confirms the trading position lenders are underwriting against.
Buyer Asset & Property Position
Any property the incoming owner can offer as security (with estimated value and mortgage balance), and any company-owned assets eligible for refinance.
MBO Deals From The SME Finance Hub Desk
Three live UK examples of management buy outs we structured in 2024–2025, showing how the right route depends entirely on the buyer's starting position.
50/50 director takes 100% — unsecured PG only
The business
B2B services Ltd, £1.1m turnover, two equal directors for 8 years. One director ready to exit; the other has run operations day-to-day and wants full ownership.
What they needed
£180,000 to buy out the exiting 50% shareholding at agreed valuation, completed inside 6 weeks.
How we structured it
5-year unsecured term loan to the company on a single PG from the incoming sole owner. No property charge. Deferred consideration of £40k payable to the seller over 24 months agreed alongside.
The outcome
Deal completed in 4 weeks. Monthly serviceability comfortable within existing free cash flow; outgoing director paid in full on completion plus deferred element.
Buyout funded by 2nd charge on director's home
The business
Manufacturing business, £2.4m turnover, founder retiring after 22 years. Long-serving general manager (10% existing shareholder) buying remaining 90%.
What they needed
£420,000 — beyond what unsecured lending alone would support against the EBITDA.
How we structured it
Blended deal: £180k unsecured term loan + £240k secured via 2nd charge on the buyer's residential property at 62% combined LTV. Both facilities on 7-year terms.
The outcome
Founder exited cleanly, buyer took 100%. Combined monthly repayment well inside trading cash flow, with property charge releasing on full repayment.
Asset refinance + invoice finance fund a partnership buyout
The business
Engineering firm, three partners, £3.8m turnover, £600k of owned plant on balance sheet, £400k active sales ledger. Two partners buying out the third.
What they needed
£550,000 to settle the exiting partner's share, ideally without taking personal property security.
How we structured it
Asset refinance against existing owned plant (£280k advanced) combined with a new invoice finance facility + £270k bolt-on term loan secured against the ledger. PGs from the two ongoing partners.
The outcome
Exiting partner paid in full on completion. No property charges required. Combined cost served comfortably from existing margins and the new IF facility provided working capital headroom going forward.
No two MBOs look the same. The job of a specialist broker is to design the structure around the buyer's reality — not to push the buyer into whichever product the lender happens to be selling that month.
Explore The Underlying Products
Unsecured Business Loans
3 to 5-year term on a director's PG — the cleanest MBO route where an existing director is taking 100%.
Secured Business Loans
Up to 75% LTV on property — 1st, 2nd, 3rd or equitable charge. The largest facilities and longest terms.
Asset Refinance
Release equity from owned vehicles, plant or equipment — often used as a top-up to the main MBO facility.
Invoice Finance
Releases working capital against the sales ledger and supports a bolt-on term loan for the share purchase.
Eligibility Requirements
To qualify for our alternative business finance solutions, your business needs to meet these basic criteria
Quick Eligibility Check
UK Registered Company
Your business must be either a limited company, LLP, sole trader or partnership in the UK
Monthly Turnover £10k+
Minimum monthly turnover of £10,000 to qualify for funding
6+ Months Trading
At least 6 months of established trading history required
UK Resident Director
At least one director or shareholder must be a UK resident
Meet the criteria?
If your business meets these requirements, you could be eligible for funding despite bank declines
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Common Questions About MBO Funding
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