Buy-In Management Buyout (BIMBO)

Buy-In Management Buyout (BIMBO) is a form of a leveraged buyout (LBO) that incorporates characteristics of both a management buyout and a management buy-in. A BIMBO occurs when existing management — along with outside managers — decides to buy out a company. The existing management represents the buyout portion while the outside managers represent the buy-in portion.

Buy-In Management Buyout (BIMBO) is a term that originated in Europe to describe a type of LBO that combines new external management with internal management to refresh the direction of the company and streamline operations. This option provides advantages of a buy-in and a buyout. The transfer will be made much more efficiently and without disruption because the existing members of management are already familiar with the business. This management buyout is complemented with management buy-in, which results in the influx of leaders with expertise to fill in areas of need, whether in new product or service development, marketing, operations management or finance.

New and existing managers must get along for the BIMBO to work. Energized new managers may have novel ideas that they wish to implement right away, while existing managers may fall into turf-protection mode. Employees may take sides. Conflicts are inevitable, as they are in all organizations, but if they become too pronounced or distracting the business may not run as envisioned before the transaction took place. An LBO involves an increase of debt on the balance sheet that must be managed responsibly by the management team. The risk is that debt service may not be handled smoothly, causing some financial stress in the new company. However, since the group of managers are now owners of the company, they have every incentive to behave like owners, which means making rational decisions to increase the odds of success.