Management buy-in: prevent misery by good agreements at the start

A management buy-in (MBI) often feels like a fresh start. A new partner steps into the company, brings capital and experience, and together you work on growth. The energy is bursting, and at that stage hardly anyone thinks about a scenario in which things go wrong.

Yet in practice, we regularly see that over time entrepreneurs start to think differently about the course of action. Some want to grow fast and take risks, while others prefer stability. Or disagreements arise about money, control or the division of roles. At that point it often turns out that no good agreements were made at the start. And then things get complicated - and expensive.

Why agreements in an MBI are crucial

In a management buy-in, you step into an existing company as a new partner. That means there is already a culture, structure and history. The incumbent often has a clear idea of "how things should be done," while the new partner comes with fresh ambitions. That difference can be fruitful, but it can also clash.

👉 Precisely because you start with different backgrounds in an MBI, you need to agree on clear ground rules. Without that basis, you have nowhere to fall back on in case of conflict.

Five things to take care of before you start

1. Vision, roles and expectations

A partnership hinges on a shared view of the future. Do you agree on the company's direction for the coming years? And how the strategy will be implemented?

In addition, it is important to agree on exactly what the MBI'er gets to decide and where the current entrepreneur has his or her finger in the pie. If this is not crystal clear, irritations quickly arise. Therefore, agree on responsibilities (operational vs. strategic), authority and reporting lines.

Tip: also document what expectations you have of each other in the first 2-3 years. Think of revenue goals, investment plans or the role of the entrepreneur taking a step back (in part).

2. Decision-making and control

In an MBI, the new partner is often a co-shareholder. But what happens if you fundamentally disagree?
Regulate how decisions are made, who has the final say on which issues, and how to resolve a stalemate.

Common appointments:

• unanimous consent is required for investments above a certain amount,
• Strategic decisions (mergers, acquisitions) can only be made jointly,
• in the event of a disagreement, mediation is sought first, then possibly a binding opinion.

👉 This will prevent a disagreement from immediately turning into a trench war.

3. Cash flows and rewards

A common source of conflict is money. Consider:

• How salary and dividends are determined,
• How profits are distributed,
• How new investments are financed.

Especially in an MBI, where the joining partner often pays a purchase price or brings financing, transparency on this is essential. Also agree on the ratio of salary (security) to dividend (risk) so that no one feels shortchanged.

4. Exit arrangements in case of conflict

The trickiest, but perhaps most important question: what if it doesn't work?
You don't want to think about divorce only after the atmosphere has already soured. Therefore, document in advance:

• How shares are valued at exit,
• Whether there is an offer requirement (you must sell to your co-partner first),
• What happens in the event of illness, death or retirement.

A clear exit clause prevents a conflict from ending up in court.

5. Competition and loyalty

An MBI'er often brings his or her own experience and network. This is valuable, but can also create tension. Therefore, it is wise to make agreements about side activities, client contacts and confidentiality. That way everyone knows where the boundaries are.

Case study

An entrepreneur brought an outside partner on board several years ago through an MBI. Everything was going well until disagreements arose over investments in digitization. One wanted to invest millions in innovation, the other thought that was irresponsible. Because no agreements had been made about decision-making and exit, they were deadlocked. The company lost valuable time and growth opportunities.

Only after an arduous legal battle was the cooperation terminated. With a clear shareholder agreement, they could have avoided this - or at least resolved it more quickly and cheaply.

Checklist: are you MBI-proof?

Before entering into a management buy-in, ask yourself (and your partner) these questions:

1. Vision & role assignment - Do we share the same vision and are responsibilities clearly assigned?
2. Decision-making - Do we know how to deal with disagreements or stalemates?
3. Finance - Are salary, dividends and investments transparently regulated?
4. Exit - Do we know what happens if one of us quits, gets sick or dies?
5. Competition - Are there agreements on ancillary activities and confidentiality?
6. Future View - Do we have the same goals for the next 5 years?
7. Contracts - Are all agreements set forth in a shareholder agreement and bylaws?

👉 If you have to hesitate on one or more points, it is a signal to put things on paper before making cooperation official.

Conclusion: arrange separation at the outset

A management buy-in begins with energy and trust. That is precisely what makes it difficult to talk about conflict or possible separation. Yet that is necessary. By establishing vision, roles, control, remuneration and exit arrangements in advance, you prevent a difference of opinion from turning into a fighting divorce later on.

It may seem uncomfortable to talk about a possible end at the outset. But as with a marriage, it is precisely by arranging the arrangements well in advance that you increase the chances of a lasting relationship.

👉 Are you about to do an MBI, or do you already have a partner in your business without everything being properly written down? Don't wait for tension to arise. Want to know what agreements are essential in your situation? Schedule a no-obligation consultation.